GBPUSD forms shooting star as UK wages slide to 2014 lows

The GBPUSD pair’s momentum eased after the Office of National Statistics (ONS) released mixed employment numbers from the UK. The pair is now trading at 1.2643, which is below the overnight’s high of 1.2687.

UK unemployment rate steady

According to the ONS, the UK unemployment rate remained steady at 3.9% in April. This was a surprise to many analysts who were expecting the rate to jump to 4.7%. They were expecting it to shoot because the country was in lockdown in April. Still, the stable rate could be because the data did not capture the entire month.

Meanwhile, more than 528k people filed for jobless claims in April. This was significantly higher than the previous increase of more than 856k. But it was worse than the 400k that analysts were expecting.

Wages are an important part of the economy. Higher wages tend to lead to higher consumer prices, which is part of the mandate of the Bank of England. According to the ONS, average earnings without bonus increased by 1.7%, which was the lowest it has been since 2014. Bonuses included, the wages declined from the previous 2.3% to 1.0%.

The mixed employment data interfered with the GBPUSD rally that happened in overnight trading. This rally was because of a new policy by the Federal Reserve to start buying individual corporate bonds. Before this, the bank was acquiring the bonds as part of ETFs.

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GBPUSD technical outlook

On the hourly chart, the GBPUSD pair formed an inverse hanging man pattern (or a shooting star), whose high was at 1.2688. At the current price of 1.2643, the pair is trading at the highest level since June 12. It is also above the 50-day and 25-day exponential moving averages. Also, it is as if the pair is forming a cup and handle pattern, which means that the price may continue to decline as bears attempt to test the 25-day EMA at 1.2600.

On the flip side, a move above the upper side of the shooting star pattern will continue pushing higher. This is because it will send a signal that there are more buyers in the market.

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