- GBP/USD has failed to stage a convincing rebound.
- 1.2000 aligns as the next bearish target for the pair.
- US housing data will be featured in the US economic docket.
GBP/USD has been struggling to gather recovery momentum after having lost nearly 200 pips since Friday. 1.2000 aligns as significant support for the pair and sellers are likely to remain in control of the action as long as the 1.2050 resistance holds.
Earlier in the day, the data published by the UK's Office for National Statistics revealed that the Unemployment Rate for April to June 2022 was 3.8% in the UK as expected. Further details of the report showed that wage inflation, as measured by the Average Earnings Including Bonus, declined to 5.1% from 6.4% in the same period. Although the UK's FTSE 100 Index opened in positive territory after this report, the British pound is having a difficult time finding demand.
In the American session, the US Census Bureau will publish the Housing Starts and Building Permits data for July. Markets expect both figures to continue to decline as rising interest rates continue to weigh on mortgage demand and the housing market as a whole. In case these prints fall at a stronger pace than forecast, investors could scale back hawkish Fed bets and the dollar could lose its strength, at least in the short term.
The US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, was last seen rising 0.26% on the day at 106.75. Meanwhile, US stock index futures trade flat, pointing to a neutral market mood so far on the day.
GBP/USD Technical Analysis
The pair faces the next significant support at the 1.2000/1.1990 area (Fibonacci 61.8% retracement of the latest uptrend, psychological level). In case this level fails, sellers could take action and drag GBP/USD toward 1.1940 (static level) and 1.1900 (psychological level).
On the upside, strong resistance seems to have formed at 1.2050 (Fibonacci 50% retracement, 200-period SMA on the four-hour chart). With a four-hour close above that level, sellers could move to the sidelines and allow the pair to recover toward 1.2100 (psychological level, Fibonacci 38.2% retracement) and 1.2130 (100-period SMA).
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