GBPUSD slumps to daily lows after better than expected employment date from the USA. The United States Nonfarm Payrolls (NFP) came in at 1763K in July, beating the expectations of 1600K, but at a slower pace as the economy added 4.8 million jobs in June. The unemployment rate fell to 10.20% from 11.1% in June. The Labor Force Participation Rate climbed to 61.4%, topping the expectations of 61.1% in July.
The Average Weekly Hours came in at 34.5 above the forecasts of 34.4. The Average Hourly Earnings came in at 4.8% also above the estimates of 4.2%. The U6 Underemployment Rate registered in at 16.5% below the forecasts of 19.7%.
The British pound rallied the last month as the new coronavirus cases continue to rise in the USA, and investors fear that the recent economic recovery might be halted.
Pound also got support yesterday from the BoE monetary policy decision and the statement. Bank of England kept the interest rates and the bond purchase programme unchanged and raised its forecasts for the UK economy. The Bank of England now expects the UK economy to contract by 9.5% in 2020 before returning to growth by about 9% in 2021.
The central bank also warned that unemployment would remain around 7.5% in 2020. The inflation rate expected to be subdued and will reach 2% in two years.
GBPUSD Daily Analysis
GBPUSD is 0.41% lower at 1.3087, as the pair retreat from almost yearly highs and a rally that drove the pair into the overbought area. The technical outlook remains bullish for the pair despite today’s correction. Further correction can’t be ruled out traders might take some profits off the table, but will also be a buying opportunity.
On the downside, the first support for thepair is at 1.3065 today’s low. The further correction would meet the next support at 1.2982 the low from August 4. More buyers would wait at 1.2836 the low from July 28.
On the other side, today’s top at 1.3154 would be the first obstacle for bulls. The next resistance for GBPUSD would be met at 1.3189 the high from yesterday’s trading session. The nest supply zone is at 1.3211 the high from March 9.
GBPUSD Daily Chart