GBP/USD Forecast: Bears take control after poor UK data

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3757

UK employment-related data showed an unexpected increase in unemployed people.
Prevalent risk aversion boosted demand for the greenback, despite lower yields.
GBP/USD trades at fresh one-month lows with increased bearish potential.

The GBP/USD pair fell to 1.3751, its lowest since early February, as the greenback got fueled by risk aversion while the pound was smashed by poor UK data. The country reported that in February, the number of unemployed people increased by 86,600. The ILO Unemployment rate for the three months to January decreased to 5%, better than the expected 5.2%. Average Hourly Earnings in the same period increased by less than anticipated, with wages excluding bonus at 4.2%.

The UK’s macroeconomic calendar will remain busy on Wednesday, as the country will release February inflation data. The Consumer Price Index is foreseen at 0.8% YoY, while the core reading is expected steady at 1.4%. Markit will publish the preliminary March Manufacturing PMI, foreseen at 55 from 55.1, and the services index, expected at 51 from 49.5 previously.

GBP/USD short-term technical outlook

The persistent dollar’s strength maintained the GBP/USD pair below the 1.3800 threshold, currently trading a few pips above the mentioned daily low. The 4-hour chart shows that the pair has plunged below its moving averages, while the 20 SMA turned firmly bearish below the larger ones. Technical indicators reached oversold levels, partially losing their bearish strength afterwards. Nevertheless, the risk remains skewed to the downside, with further slides expected once below 1.3720, the next support level.

Support levels: 1.3720 1.3680 1.3635

Resistance levels: 1.3805 1.3860 1.3910

View Live Chart for the GBP/USD

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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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