The GBP/USD is pointing lower ahead of the important UK employment numbers that will come in the morning session. The GBPUSD is trading at 1.3650, which is lower than yesterday’s high of 1.3725.
What’s happening: There are three main catalysts pushing the GBP/USD price lower. First, investors are looking ahead to the UK employment numbers that will come out at 07:00 GMT. Investors expect the data to show that the UK unemployment rate rose from 4.9% to 5.1% as most companies adjusted to the new normal. Also, they expect that the claimant count increased by 35,000 in December while the average earnings ex-bonus increased by 3.2%.
The GBP/USD is also reacting to the stimulus issue in the United States where some vital moderates have expressed reservations of the $1,400 stimulus check. That has seen the dollar rise. Finally, investors are still focused on the Federal Reserve, which will deliver its interest rate decision tomorrow. A hawkish Fed will see the GBP/USD drop further and vice-versa.
The three-hour chart shows that the GBP/USD pair has formed a rising wedge pattern that is shown in purple. Also, the Average True Range (ATR), which is an important measure of volatility has continued to drop. The price is also slightly below the 25-day and 15-day exponential moving averages.
Therefore, in my view, better UK employment numbers will push the GBPUSD higher since it will reduce the chatter of negative rates. However, if the numbers disappoint like the December retail sales did, the pair could drop further.
GBPUSD technical chart