GBPUSD bears look to retest 1.2220 as latest jobs data send a warning

GBPUSD
GBPUSD

The GBPUSD pair was little moved today even after the Office of National Statistics (ONS) released jobs numbers for February. The pair held steady at around 1.2417.

UK Jobs Data

Jobs are an important indicator for the economic wellbeing of a country. Therefore, investors track them carefully to see how the economy is performing. Unfortunately, the ONS does not release timely jobs numbers, which is the main reason why the GBPUSD pair was little changed. The numbers released today were those created in February. In contrast, in the US, the Bureau of Labour Statistics releases jobs numbers in the first Friday of every month.

The numbers released today showed that the UK economy was struggling before the coronavirus lockdowns. The unemployment rate rose from 3.9% to 4.0%, which is its highest level in months. Some analysts expect the rate to soar to more than 10% if the ongoing shutdowns remain. This will be the highest rate in decades.

Wages were also weak in February. The report showed that the average earnings ex bonus declined from 3.1% to 2.9%. When bonuses are added, the wages declined from 3.1% to 2.8%. In other words, this wage growth is the weakest it has been since 2018.

Another data showed hat the number of claimants started to rise in February. The number of people filing for claims rose from 5.9k in January to more than 12.1k in February. This was the highest jump since November last year. Experts believe that the situation will continue to get worse. Furthermore, most people in the UK are not working during the lockdown.

Brexit Talks

Meanwhile, traders are still paying attention to the ongoing Brexit talks. The talks, which are being done through video link aim to create a deal that will guide trade after the transition ends. As we wrote yesterday, there are several key differences that need to be addressed. For example, they have to decide whether to come up with a big single deal or several small ones. The UK prefers the latter.

Another main issue is on regulations. The UK has said that it wants its organisations to offer regulations to firms. The EU opposes this because it believes that it will lead to unequal competition. Therefore, because of these wide differences, it is difficult to see how a deal will be reached.

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GBPUSD Technical Outlook

Looking at the daily chart, we see that the GBP/USD pair has been falling since Wednesday last week, when it was trading at 1.2651. The price has then moved below the 50% Fibonacci Retracement level. This retracement was drawn by linking the highest point in December last year to the lowest level this year.

The price is also below the 50-day and 100-day exponential moving averages. The price also appears to be forming a head and shoulder pattern. Therefore, the pair may continue falling and attempt to retest the 38.2% Fibonacci Retracement level at 1.2220.

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