GBPUSD forms bullish pennant after mixed UK employment data

The GBPUSD pair is up for the second straight day as investors react to the UK’s jobs numbers. The pair is trading at 1.3088, which is higher than yesterday’s low of 1.3021.

According to the Office of National Statistics (ONS), the unemployment rate in the UK remained unchanged at 3.9% in June. This was better than the 4.2% that analysts were expecting. The number is far-much better than what is happening in other countries like the US and those in the Eurozone, where the rate is above 10% and 7%, respectively.

The lower unemployment rate in the UK is mostly because of the government, which is paying salaries for most people. Therefore, since this program will end later this year, analysts believe that the rate will creep up back.

Meanwhile, average earnings without bonus declined by 0.2% in June after rising by 0.7% in the previous month. This was worse than the expected decline of 0.1%. With bonuses included, the average earnings declined by 1.2%. This number is a good measure of the performance of the economy because companies tend to pay overtime when the economy is doing well.

The GBPUSD pair is also reacting to the rising claimant count. In July, claimants increased by 94.4k, which was significantly higher than the 10k that analysts were expecting.

It is worth noting that UK employment numbers are usually not similar to those by other countries like the US. In the US, the Bureau of Labour Statistics (BLS) usually releases a month’s jobs data the first Friday of the month, thus reducing the lag.

GBPUSD forecast

The daily chart below shows that the GBPUSD pair has been in an upward trend after falling to 1.1415 in March. The price rose and reached a high of 1.3180 on Thursday last week. The price remains above the 50-day and 100-day exponential moving averages. Also, it seems like the pair has found strong resistance at the 1.3180 level, which was the highest swing on March 9. The price seems to be forming a bullish flag pattern, which means that it will likely continue with the upward trend.

On the flip side, a move below 1.3000 will invalidate the upward trend because it will mean that there are more sellers in the market.

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GBPUSD forecast


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