The GBPUSD pair rose after the Office of National Statistics (ONS) released stronger jobs data than earlier expected.
British pound jumps after strong jobs data
Data from the ONS showed that the claimant count soared in April as the country started implementing a countrywide shutdown. The number soared to more than 856k, which was the highest it has been in years. It was also higher than the previous 12k and the expected 676k.
On an upbeat note, the employment change between January and March rose by more than 211k, which was better than the expected 50k. Also, the unemployment rate declined slightly in March to 3.9% from the previous 4.0%. Analysts were expecting the data to jump to 4.4%. Wages remained relatively stable at 2.7% (without bonus) and 2.4% with bonus.
UK removes key tariffs
The GBPUSD pair also moved because of the new tariffs announcement by the UK. In a statement, the government said that it will maintain a 10% tariff on cars and agricultural products like lamb and beef. The government says that these tariffs are important in order to promote jobs. Still, most tariffs will be eliminated under the new plan. 60% of goods to the country will come to the country tariff free on WTO terms.
UK faces key challenges
While the GBPUSD rose, the fact is that the UK faces numerous challenges going forward. The biggest of these is that the country is yet to finalise a trade deal with the European Union. Just last week, talks between the two sides ended without a deal, increasing the possibility that the two will not reach an agreement.
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GBPUSD technical outlook
On the four-hour chart, the GBPUSD pair formed a hammer pattern on May 18. The pair rose to an intraday high of 1.2268, which is slightly below the 38.2% Fibonacci retracement level. Also, the price is slightly above the 50-day and 25-day exponential moving averages. Therefore, it happens that the bulls are in total control now, which means that the pair will retest the important resistance level of 1.2300.
On the other hand, a move below the 23.6% retracement level at 1.2213 will invalidate this thesis.