The GBP/USD pair is gaining traction this Tuesday after strong UK jobs data put the cable on bid. The pair is up 0.66% after UK job vacancies fell by 20,000. However, this was less than the previous fall (-34.7K via a downward revision). It also fell short of market expectations (-41.2K).
Still, a reduction in job vacancies despite looming fears of a recession was enough for traders to place demand for the Pound amid generalized US Dollar weakness this week. The unemployment rate remained static at 3.8%. The market may also have an eye on the Conservative Party election holding today as the search for Boris Johnson’s successor concludes.
Former Chancellor of the Exchequer Rishi Sunak is widely expected to pick the Tory Party’s leadership slot, making way for him to become the new UK PM. However, being a member of the old order may not have a material impact on the market sentiment around the GBP/USD pair.
The Bank of England’s Governor Andrew Bailey is due to speak at an event in London later today, and unscripted comments could provide some hints as to the monetary policy direction of the UK’s apex bank, creating some volatility on the pair.
The daily chart reveals that the falling wedge pattern identified by the writer last week has resolved with Monday’s violation of the pattern’s upper border. The Tuesday active candle has also breached the resistance at 1.19991 but needs to close above the 18 July high to fulfil the 3% penetration filter.
If this occurs, the bulls will have clear skies to aim for the 1.21673 resistance (12 May low and 4 July high). Above this level, additional targets to the north are found at 1.22755 (20 June 2022 high) and the 28 April low/16 June high at 1.24167. Attainment of this price point completes the pattern’s measured move.
On the other hand, the downside bias is reclaimed if the price action breaks down the 1.18061 support (12 July 2022 low). This scenario allows the bears to target the 1.16566 support (25 March 2020 low). If this pivot fails to hold up price action, the 1.14538 support level comes next, the site of previous lows of 18 March/24 March 2020.