GBP/USD analysis: holding within familiar levels, but risk of a bearish breakout increased

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3509

UK employment data failed to impress, GBP/USD extended yearly slump.
Dollar favored by soaring yields and interest rates' differentials.

The GBP/USD pair fell this Tuesday to 1.3450, surpassing its January's low by a few pips before bouncing some. UK employment data was mixed, as the unemployment rate remained steady as expected at 4.2% in the three months to March, while wages' growth also met forecasts. The number of people claiming for unemployment benefits, however, rose sharply in April, up 31.2K against market's expectations of 7.8K. The positive wages' growth, however, fell short of indicating inflationary pressures, therefore not enough to change the BOE's outlook on interest rates. The UK macroeconomic calendar has nothing to offer this Wednesday. Despite the lower low for the year, the GBP/USD pair managed to bounce back to settle around the 1.3500 level, still within familiar levels. Technically, and considering resurgent dollar's demand, the risk is leaned to the downside, given that in the 4 hours chart, the pair is developing below a still horizontal 20 SMA, while technical indicators are posting modest bounces within bearish territory. Speculative interest is at this point not sure whether to push the greenback higher or not but keeps it near recent highs, somehow favoring a dollar continuation rally on the back of interest rates´ differentials.

Support levels: 1.3550 1.3500 1.3460

Resistance levels: 1.3610 1.3660 1.3700

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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