The UK is set to print its October jobs report on Wednesday and might show a smaller increase in claimants of 1.6K versus the previous 4.6K. This could be enough to keep the unemployment rate steady at 5.4% – its lowest level in seven years.
Prior to this, the Bank of England expressed a less hawkish outlook in their recent rate statement and MPC meeting minutes, indicating downgrades in their growth estimates under the latest Inflation Report. Policymakers stressed that economic conditions have weakened significantly since their earlier report, leading market watchers to predict that the central bank won’t be hiking rates at all next year.
Because of this, traders are on the lookout for potentially disappointing jobs data, which might push GBP lower against its forex peers. The UK currency has sold off sharply following last week’s BOE events but has been able to recover at the start of this week.
GBPUSD has broken below a near-term support area at the 1.5250 minor psychological mark then tumbled to the 1.5025 level. From there, signs of a pullback materialized, possibly taking price to the 38.2% Fib near the 100 SMA or the 50% Fib at the 200 SMA.
Stochastic and RSI are heading up, showing that buyers are in control and that the correction could carry on. Once the downtrend resumes, price could make a move towards the previous lows.
Strong data could spur a higher correction to the 61.8% Fib or 1.5300 major psychological level while weak figures could allow the selloff to resume early and push GBPUSD to new lows.
EURGBP is currently hovering at the bottom of its long-term range, still deciding whether to make a downside break or a bounce back to the resistance. The UK jobs release could serve as a good catalyst for a directional play.
Stochastic and RSI are both trying to climb out of the oversold region, indicating a possible bounce, while the 100 SMA looks ready for an upward crossover. Weak data could spur a rally back to the range resistance near .7450 or at least until the middle at .7200.
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