Economists polled by Reuters expect the data to show that the country’s unemployment rate rose from 4.2% in June to 4.3% in July.
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- Sell the GBP/USD pair and set a take-profit at 1.2400.
- Add a stop-loss at 1.2600.
- Timeline: 1-2 days.
- Set a buy-stop at 1.2555 and a take-profit at 1.2650.
- Add a stop-loss at 1.2475.
The GBP/USD pair wavered on Tuesday ahead of important economic data from the United States and the United Kingdom. The pair was trading at 1.2515, a few points above last week’s low of 1.2445.
The GBP/USD exchange rate will have some volatility in the coming days as the US and the UK are set to publish important economic data. The UK will go first on Tuesday when the Office of National Statistics (ONS) will publish the latest jobs numbers.
Economists polled by Reuters expect the data to show that the country’s unemployment rate rose from 4.2% in June to 4.3% in July. The key data to watch will be trends in wages. The average earnings plus bonus is expected to come in at 8.2%. Without a bonus, average earnings are expected to be at 7.8%.
Earnings are important because they are key drivers of inflation. Therefore, higher wages will point to more challenges for the Bank of England (BoE), which is fighting to lower inflation. The most recent data showed that the country’s inflation rose to 6.4% in July.
The other key data that wil move the GBP/USD pair will be the latest UK GDP data. Economists expect the data to show that the economy contracted by 0.2% in July. This decline will translate to a YoY growth of 0.4%. The ONS will also publish the latest trade, manufacturing, and industrial production numbers.
The most important catalyst for the pound-to-USD pair will be the upcoming US Consumer Price Index (CPI) data. These numbers will help to set the tone for what to expect in next week’s decision by the Federal Reserve. Economists expect the data to show that inflation remained above the Fed target of 2.0%.
The GBP/USD pair has been in a strong downward trend in the past few months. Precisely, it has dropped by more than 4.7% from the highest level in July. Along the way, the pair has formed a descending support, which connects the lowest swings since July 21st.
Sterling has remained solidly below the 50-period moving average and the crucial resistance at 1.2590, the lowest level in June. Therefore, the outlook for the pair is bearish, with the next key reference level being at 1.2400.
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