GBP/USD rises 0.4% on UK jobs beat, unemployment drops to 4.0%

GBP/USD surged 0.4% (50 pips) to 1.2680 following stronger-than-expected UK employment data that reinforced expectations for Bank of England policy tightening. UK unemployment fell to 4.0% in November, beating forecasts of 4.1%, while average earnings including bonuses rose 5.6% year-on-year, exceeding the 5.5% estimate. The robust labor market data contrasts with recent weak UK GDP figures, creating a complex backdrop for BoE decision-making. Sterling found additional support from broad dollar weakness as traders reassess Fed rate expectations. Technical indicators show GBP/USD breaking above the 1.2650 resistance level, with next targets at 1.2720 (December high) and psychological 1.2750. Support lies at 1.2620 (previous resistance turned support). The employment strength suggests the BoE may maintain its hawkish stance despite growth concerns, potentially supporting sterling in the near term.