Sterling traded above $1.42 on Tuesday for the first time since February, boosted by better-than-expected UK jobs data.
Figures released earlier by the Office for National Statistics showed the unemployment rate unexpectedly ticked lower in the three months to March, to 4.8% from 4.9% in February, versus expectations for it to be unchanged.
The ONS said the latest figures suggest the jobs market has been broadly stable in recent months “with some early signs of recovery”.
The number of payrolled workers rose by 97,000 in April, marking the fifth monthly increase in a row, but remains 772,000 below pre-pandemic levels. Since February 2020, the largest falls in payrolled employment have been in the hospitality sector, among those aged under 25 years, and those living in London.
Neil Wilson, chief market analyst at Markets.com, said: “The three-month calls for a look again at the post-pandemic peak at 1.4250 struck on Feb 24th, but rejection of this area again may signal a double top and slow grind back to the 1.38 region.
“The British labour market looks in decent shape for now; the true test comes with the end of the furlough scheme.”
The dollar was under pressure following dovish comments on Monday from Federal Reserve vice chairman Richard Clarida, who suggested it was too soon to talk about taping after April’s labour market report.
Lukman Otunuga, senior research analyst at FXTM, said: “Dallas Fed President Robert Kaplan, a known ‘hawk’ on the FOMC, also spoke on Monday and said he believed price pressures would moderate in 2022.
“The greenback has weakened against every single G10 currency this month with the Dollar Index (DXY) approaching levels not seen since late February. If the DXY secures a solid daily close below the 90.00 psychological support, this signals further downside with 89.70 acting as the first level of interest.”
