Bearish View
- Sell the GBP/USD and add a take-profit at 1.4030 (38.2% retracement).
- Add a stop-loss at 1.4150.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.4150 and a take-profit at 1.4250.
- Add a stop-loss at 1.4100.
The GBP/USD pair was in a tight range during the Asian session as traders waited for the key UK employment and US retail sales numbers. The pair is trading at 1.4100, which is in the same range it has been in the past few sessions.
UK Employment and US Retail Sales
The Office of National Statistics (ONS) will publish the latest UK jobs numbers today. Analysts expect the data to show that the unemployment rate declined from 4.8% in March to 4.7% in April. If they are right, the rate will be better than in other countries like the United States and Germany.
They also expect the data to show that average earnings plus bonus rose from 4.0% to 4.9%. Without bonuses, they expect the earnings to have risen from 4.6% to 5.3%.
The UK jobs data will come a day ahead of the latest inflation numbers. Like in the United States, analysts believe that the headline and core CPI approached the Bank of England target of 2.0%. These numbers are coming at a time when the Boris Johnson administration expanded some lockdowns for four weeks to curb the fast-spreading delta variant of coronavirus.
The GBP/USD will today react to the latest US retail sales and Producer Price Index (PPI) data. Analysts expect the data to show that sales growth decelerated in May because of the relatively high prices and the fading impact of the recent stimulus. As such, they see the overall sales falling by 0.7% on a month-on-month basis while core sales rose by 0.2%.
The PPI is expected to come in at 6.3% on a year-on-year basis. In some countries like China, the gap between the PPI and CPI has widened, meaning that companies are not passing costs to consumers. These numbers come a day before the Fed decision.
GBP/USD Technical Analysis
The GBP/USD pair was in a tight range during the Asian session ahead of key economic data. On the four-hour chart, the pair is approaching the vital support at 1.4085. It has also moved slightly below the 23.6% Fibonacci retracement level and is slightly below the middle line of the Bollinger Bands.
Therefore, the pair may soon break out lower as bears target the next support at 38.2% Fibonacci retracement at 1.4028. However, a move above 1.4150 will invalidate this trend.
