Bullish view
- Set a buy-stop at 1.3875 and a take-profit at 1.3980.
- Add a stop-loss at 1.3800.
- Timeline: 1-3 days.
Bearish view
- Set a sell-stop at 1.3800 and a take-profit at 1.3700.
- Add a stop-loss at 1.3900.
The GBP/USD came under intense pressure in the overnight session as the market waited for the upcoming economic data from the UK. The pair also declined as investors rushed to safety following the Afghanistan crisis and talk about Fed tapering.
UK Jobs Numbers
The UK economy has done relatively well in the past few months since the country made strong progress in vaccinating its residents. The labour market has also been stronger than in some other countries like the US because of the government’s furlough program.
Still, the main risk for the labour market is that the economy will start weakening as the Delta variant spreads.
The Office of National Statistics (ONS) will publish the latest UK jobs numbers today. In general, analysts expect that the country’s unemployment rate remained unchanged at 4.8% in June as the country reopened. This rate is significantly below that of the US and the Eurozone.
The numbers are also expected to show that the country’s average wages without bonuses rose from 6.6% in May to 7.4% in June. With bonuses, they expect the numbers to show that wages increased to 8.6%. This trend will be driven by the hospitality industry, which has struggled to find workers in the past few months.
In addition to the UK jobs numbers, the GBP/USD pair will react to the US retail sales numbers and a statement by the Federal Reserve chair. The country’s retail sales are expected to have declined by 0.2% in July as some states started to implement some Covid-prevention measures. Core retail sales are expected to have dropped from 1.3% to 0.1%.
Other key numbers scheduled from the US are manufacturing and industrial production. The Fed chair will also move the pair because he will likely talk about the timeline of tapering.
GBP/USD Forecast
The two-hour chart shows that the GBP/USD pair has declined by about 1% from its highest level in July. The pair is also approaching the 38.2% Fibonacci retracement level. Further, it has formed a descending channel, which seems like a bullish flag pattern. It is now between this channel. At the same time, it is at the middle line of the Bollinger Bands indicators.
Therefore, the pair will likely break out higher in the near term. If this happens, the next reference point will be at the 0.3982 level.
