GBP SLIDES AS UK LABOR DATA MISS FUELS DOVISH BOE BETSEarlier today, the UK’s Claimant Count Change (jobless claim) i.e. the number of people in the UK claiming unemployment related benefits for the month of May was released with a whopping 33.1k against 9.5k projection and average earnings index plus bonus witnessed a decline to 5.3% against 5.5% forecast.
Today’s disappointing UK labor market report prompted a notable shift in market expectations for Bank of England policy. Following the release of the weaker-than-expected jobs data, traders are now pricing in a more dovish path ahead, anticipating around 48 basis points of rate cuts by the end of the year as against 38bps before the data release.
In the wake of the weak data, GBP tanked across board and GBPUSD wasn’t left out.
TECHNICAL VIEW OF GBPUSD AND POTENTIAL TARGET AS PER ANALYST
From the technical perceptive, the GU on the 2H closed below the 50 EMA and is seen supported around the trendline at 1.3467 as evident on the chart.
With the formation of H&S pattern and a clear break of the neckline at 1.3503, it hints that sellers are still dominant. While waiting for the next catalyst. If buyers step in and GU retraces, analyst expects potential target towards 1.3562 and a break above this would usher in the next resistance around 1.3610. On the flip side, if the bearish momentum continues, analysts envisage potential target towards 1.3418 and further decline would usher in 1.3334.
Meanwhile, further break out of these levels are not ruled out.
UPCOMING CATALYST
On the radar, markets await U.S CPI and core CPI tomorrow. On Thursday, UK GDP and U.S PPI and core PPI would be on the wire. To wrap up the week, U.S consumer sentiment and inflation expectation would be the focus on Friday.
These data points have the tendency to cause market volatility in the coming days.
