- GBP/USD range-bounds during the New York session, directionless awaits for catalyst.
- Strong UK employment figures could boost the British pound.
- The US dollar index is flat, waits for US Inflation numbers.
GBP/USD is trading virtually unchanged on the day currently trading at 1.3831. Market sentiment remains upbeat, influencing commodity- currencies and weighing on the dollar, as investors focus on US inflation numbers.
The US dollar index that tracks the performance of the buck against a basket of currencies is at 92.66, up 0.04%. Meanwhile, the US 10-year Treasury yield is down two basis points (bps), lying at 1.322%, capping the US dollar index uptrend.
Market awaits UK employment and US inflation figures
On Tuesday, in the UK economic docket, the Claimant Count Change is expected to come at -71K, while the ILO Unemployment Rate is forecasted at 4.6%. If the reading is strong, it could give a push to the British pound. Last week, BoE’s Governor Andrew Bailey said that MPC members were split between policymakers who felt that conditions for a rate hike had been met and those who did not. Later in the week, the Office of National Statistics will reveal the inflation figures.
Meanwhile, across the pond, the CPI figures for August will be released on Tuesday. The US CPI is expected to come at 0.4%, while the CPI excluding energy and food number is foreseen at 0.3%. It will be interesting to see the impact of the last week’s high PPI readings. Data confirmed that the rising prices were fed by supply disruptions, consumer and producer goods shortages, and growing demand related to the pandemic.
GBP/USD Price Forecast: Technical outlook
In the daily chart, the GBP/USD pair is trading beneath last week’s high, approaching the 200-day moving average (DMA) lying at 1.3821. A sustained break under the latter would keep the bears in charge, exerting downward pressure on the pair, with the first key support area at 1.3800. Once that level is cleared, the bear’s next barriers levels would be the September 8 low at 1.3726, followed by the August 27 low at 1.3679.
On the flip side, if the pair bounces off the 200-DMA, it could lead towards higher prices. The first resistance level would be the 1.3900 figure. Once that level is breached, the subsequent supply zones would be the July 20 high at 1.3983, followed by 1.4000.
The Relative Strength Index is at 53.76 and flattish but, it is still above the mid-line supporting an upside bias.
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