- GBP/USD picks up bids to reverse the week-start pullback from monthly high.
- Broad US Dollar retreat underpins Cable pair’s recovery ahead of the key jobs report.
- Chatters of Brexit-led labor shortage, workers’ strikes in the UK and hardships for UK PM Sunak probe GBP/USD bulls.
- BoE’s Bailey spread dovish remarks ahead of this week’s key data.
GBP/USD stays defensive around 1.2210, despite the downbeat week-start, as Cable traders await the key UK jobs report, up for publishing on early Tuesday. It’s worth noting that the multiple negatives surrounding the UK’s employment updates join the British political pessimism to probe the pair buyers even as the US Dollar Index (DXY) weakness underpins the recovery moves.
That said, the Financial Times (FT) quotes the latest statement from the UK in a Changing Europe and the Centre for European Reform think-tanks as it said that the post-Brexit UK economy is facing a shortfall of more than 300,000 workers as the result of ending free movement of labor with the EU.
On the same line, Reuters conveyed that teachers joining the employee strikes by joining nurses, rail workers and others in staging industrial action. “The National Education Union (NEU) said that the first strike would be on Feb. 1, a date when 100,000 public sector workers are due to strike in what could become Britain's biggest day of coordinated industrial action for decades,” mentioned Reuters.
Acting as an extra negative for the GBP/USD price could be the political hardships for UK Prime Minister (PM) Rishi Sunak as The Telegraph noted that the UK government backed down over Online Safety Bill after the Conservative rebellion.
On Monday, Bank of England (BOE) Governor Andrew Bailey testified against the Treasury Select Committee in London while stating that inflation looked set to fall markedly this year.
It should be noted that a retreat in the US Dollar Index (DXY) could be considered a major positive for the GBP/USD prices, despite the aforementioned price-negative catalysts. However, the Cable pair traders may wait for the UK employment data for fresh impulse.
That said, the UK’s Unemployment Rate for three months to November is expected to remain unchanged at 3.7% but a likely improvement in the Average Weekly Earnings might help the GBP/USD to remain firmer.
Also read: GBP/USD Weekly Forecast: Pound Sterling looks to 1.2450 in the UK inflation week
Technical analysis
A six-week-old horizontal resistance near 1.2345 appears a tough nut to crack for the GBP/USD bulls. Alternatively, the 100-day EMA level surrounding 1.1940 put a floor under the Cable prices.
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