GBP/USD - Negative set up ahead of the UK jobs report

Technicals, yield differential favors the downside.
Focus on UK jobs data and May's showdown with Brexit rebels.

Omkar Godbole FXStreet Contributor

UK data released yesterday showed inflation rose to 6-year high in November. Still, the GBP/USD pair dropped to the two-week low of 1.3303 levels.

The daily chart shows a bearish 5-MA and a 10-MA cross. Also, the RSI has dipped below 50.00 levels (bearish territory). The spot failed to take out an ascending trend line (drawn from Nov. 14 low and Nov. 28 low) hurdle despite the uptick in inflation.

Further, the 10Y US-UK yield spread stands at 118 basis points (the highest since mid-August). The USD-favorable yield spread also signals the pair is on the back foot while heading into the UK jobs data release.

Focus on labor data

“The UK labor market is set to deliver another proof of strength in November. While the number of people claiming the unemployment benefits is set to increase by 3.4K in November, the unemployment rate is expected to fall further marking another multi-decade low of 4.2% in three months to October period”, said Mario Blascak, European Chief Analyst at FXStreet.

An upbeat jobs data and wage growth numbers could help the Pound revisit the 10-day MA level of 1.3420. On the other hand, a weaker-than-expected print could push cable down to 1.3245 (50-day MA). Also, PM May's parliamentary showdown with Brexit rebels could influence the pair.

GBP/USD Technical Levels

FXStreet Chief Analyst at Valeria Bednarik writes, "the technical picture is short-term bearish, with the price barely holding above quite a strong dynamic support, the 200 EMA in the 4 hours chart currently at 1.3310. The pair has remained below the 61.8% retracement of its latest bullish run at 1.3345 and below a bearish 20 SMA in the mentioned chart, while indicators hold within negative territory, but with the Momentum heading up and the RSI flat around 38, suggesting the pair may consolidate before the next directional move."

Support levels: 1.3300 1.3260 1.3220

Resistance levels: 1.3345 1.3380 1.3420

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD loses traction after earlier rebound, tests 1.1600

EUR/USD fails to preserve its recovery momentum after rising toward 1.1650 earlier in the day and tests 1.1600. The risk-averse market atmosphere amid the widening conflict in the Middle East and the broad-based US Dollar strength make it difficult for the pair to hold its ground.

GBP/USD stays weak near 1.3350 amid UK stagflation risks

GBP/USD stays in negative territory near 1.3350 in the second half of the day Thursday. The Pound Sterling loses ground amid fears that the United Kingdom economy could face stagflation risks due to higher energy prices, while the US Dollar attracts fresh safe-haven demand, weighing on the pair.

Gold struggles to benefit from risj-aversion, drops toward $5,100

Gold turns south in the American session on Thursday and declines toward $5,100. The persistent US Dollar (USD) strength doesn't allow XAU/USD to gather recovery momentum despite markets remain risks-averse due to the deepening conflict in the Middle East.

Crypto Today: Bitcoin, Ethereum, XRP hold weekly gains despite US-Iran war

The cryptocurrency market is gaining strength on Thursday, building on Wednesday's upswing, which saw Bitcoin reach a weekly high above $74,000. Ethereum and Ripple are moderating their recent gains amid uncertainty stemming from the escalating war in the Middle East.

Markets attempt to rally on positive news from Iran

There’s been an abrupt change in sentiment this morning, European stock markets are higher and oil and gas prices are moderating, after comments from Iran’s deputy minister about pre-conflict talks between Iran and the US.

Cardano Price Analysis: Approaches key trendline amid bearish sentiment

Cardano (ADA) price is approaching its descending trendline around $0.28 at the time of writing, set to shape the next directional move. The derivatives metrics paint a bearish picture, with ADA’s Open Interest continuing to fall and short bets rising among traders.