- GBP/USD stuck in the narrow range of 1.31-1.3180.
- UK labor data likely to show wage growth slowed.
- 10-year US-UK yield spread may have topped out.
Cable's drop below 1.31 levels yesterday was short-lived, courtesy of the broad-based USD weakness, still, the area around 1.3180 proved a tough nut to crack. The pair fell back to 1.3140 in Asia as investors await the all-important UK labor data.
Mario Blascak, European Head at FXStreet, writes, "the market focus will be on wage growth that is seen decelerating in September to 2.1% y/y including bonuses, while wages excluding benefits are seen rising by 2.2% y/y, at the unchanged rate from August."
A weaker-than-expected wage growth numbers could aggravate the problem of negative real wage growth and put more pressure on the Bank of England (BOE) to hike rates. However, it is easier said than done as the BOE is also battling a slowdown in consumption and brexit uncertainty. Thus, traders are likely to offer GBP if the wage growth misses estimates.
Has yield spread topped out?
The above chart shows the US-UK 10-year yield spread has left another lower high at 109.9 basis points (Nov. 8 high) and now looks set to drop further in the GBP-negative manner.
GBP/USD Technical Outlook
"From a technical point of view, the 4 hours chart shows that the price has broken above the 50% retracement of the latest daily decline and hovers Monday's high, while the RSI indicator accelerated north, now around 58, all of which favors a new leg higher, despite the Momentum holds flat around its 100 level."
Support levels: 1.3130 1.3095 1.3060
Resistance levels: 1.3185 1.3220 1.3260
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.