- GBP/USD gains positive traction for the fourth consecutive day on Tuesday.
- Dovish Fed expectations weaken USD and provide support to the pair.
- Traders now look to UK jobs data for some impetus ahead of US PPI.
The GBP/USD pair attracts some buyers during the Asian session on Tuesday and climbs to a fresh daily high, around the 1.2775-1.2780 region in the last hour. However, spot prices remain confined within the broader trading range of the previous day as traders look forward to important macroeconomic data from the UK and the US before opening fresh directional positions.
The UK monthly employment report and the US Producer Price Index (PPI) will be released later today, followed by the latest UK and US consumer inflation figures on Wednesday. This, along with the release of preliminary UK Q2 GDP on Thursday, will play a key role in influencing sentiment around the British Pound (GBP) and provide a fresh directional impetus to the GBP/USD pair.
Meanwhile, expectations that the Bank of England (BoE) will cut borrowing costs twice more this year, after the first rate cut since 2020 on August 1, could continue to weaken the GBP. The US Dollar (USD), on the other hand, is struggling to attract significant buyers amid rising bets for larger rate cuts by the Federal Reserve (Fed). This warrants caution before opening bullish positions around the GBP/USD pair.
From a technical perspective, spot prices last week showed some resistance below the 100-day simple moving average (SMA) and rebounded well from the 1.2665 region, or more than a one-month low. This, coupled with the fact that oscillators have turned neutral on the daily chart, supports prospects for a further appreciating move. That said, sustained strength beyond the 1.2800 level is needed to confirm the positive outlook.
Economic indicator
Change in unemployment claims
The rate of change of unemployment benefit applications published by National Statistics is a monthly estimate of unemployment in the United Kingdom. It indicates the strength of the labour market. If the rate increases, this indicates expansion in the labour market and would imply a rise in inflationary pressures. Thus, an increase implies a weakening of the UK economy. A reading above expectations is bullish for the pound, while a reading below is bearish.
Next post:
Tue Aug 13, 2024 06:00
Frequency:
Monthly
Dear:
14.5K
Previous:
32.3K
Fountain:
Office for National Statistics
The change in the number of people claiming unemployment benefits is an early indicator of the UK labour market. The figures are released for the previous month, as opposed to the Unemployment Rate, which is for the previous month. This release is scheduled for mid-month. An increase in applications is a sign of a worsening economic situation and implies looser monetary policy, while a decrease indicates an improvement in conditions. A higher than expected result tends to be bearish for the GBP.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
