Today we had UK jobs data followed by the Bank of England’s Quarterly Inflation Report. While employment growth was strong, the caveat has been the lack of wage growth, which is a hindrance to a 2014 rate hike by the BoE. Mark Carney also emphasized his concern of this wage growth issue, which weighed on the sterling. Let’s take a look at the GBP/USD, GBP/JPY and EUR/GBP.
GBP/USD has consolidating ahead of the releases but kept its prevailing downtrend since mid-July, intact. There is further downside toward the 1.6650 area, but we should start to see consolidation as the daily RSI has dipped into oversold territory several times. The GBP/JPY also rallied ahead of the fundamentals, but like GBP/USD, it kept its bearish bias, and extended lower after the release. There is still further downside risk as the daily RSI is NOT in oversold territory. The EUR/GBP confirmed an inverted head and shoulders after sterling fell sharply. There is near-term upside toward 0.8033, then if price can hold above 0.7990-0.80 on a pullback, there is further upside risk toward the 0.8080-0.81 area.
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