The Bearish Case Getting Stronger for GBP/USD
With the USD turning bullish in July, GBP/USD has been on a decline since then. Sellers have been in charge during this time, as this pair keeps making lower highs and a consistent decline in price. Over this period, the pair has lost approximately 7 cents from its peak, closing last week at 1.2450 where the 200 SMA stands on the daily chart. On the H4 chart though, the price has slipped below moving averages which have now turned into resistance.
The 1.2450 level has historically acted as strong resistance in the past. There was a bounce from this support zone late last week, but the upside momentum faded and the downtrend resumed again. The bearish sentiment in GBP/USD is evident in the price behavior and technical indicators, suggesting that market participants are closely watching for further declines in the currency pair.
The economic data is also showing increasing weakness in the UK economy. Yesterday we had the employment report which looked ok at first, but looking into the details it leaned on the negative side. Payroll change and employment change have been negative for the last two months, while the unemployment rate ticked higher.
UK August Employment Report by ONS
- UK August payrolls change -1k vs 97k prior
- July payrolls 97k; revised to -4k
- July ILO unemployment rate 4.3% vs 4.3% expected
- June ILO unemployment rate 4.2%
- July employment change -207k vs -185k expected
- June employment change was -66k
- Average weekly earnings +8.5% vs +8.2% 3m/y expected
- Prior average weekly earnings +8.2%
- Average weekly earnings (ex-bonus) +7.8% vs +7.8% 3m/y expected
- Prior average weekly earnings (ex-bonus) +7.8%
The report suggests a mixed picture of the labor market. While wages are increasing, the decline in payrolls and the uptick in the unemployment rate indicate challenges and uncertainties in the employment landscape. These dynamics can influence the BOE’s monetary policy negatively although this sort of mixed numbers make it hard for them to decide.
GBP/USD Live Chart
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