GBPUSD: Trend Line Support Eyed Ahead of UK GDP Report
Unlike the euro, the pound did not find any reprieve from the sellers’ advances despite disappointing US data on Friday. GBPUSD finished last week with a 9-pip loss for the day as it closed at 1.3055. In fact, the currency pair opened with a weekend gap today. GBPUSD is also seeing some selling pressure in today’s Asian session.
Disappointing NFP Data Fails to Lift GBPUSD
Last week, the Bureau of Labor Statistics reported that there were only 145,000 jobs added in December. While the US unemployment rate remained steady at 3.5% for the month, the average hourly earnings came in at 0.1%. It was lower than the expected 0.3% uptick.
The disappointing data from the US lead to gains in EURUSD, however, it would seem that it was not enough to inspire gains on GBPUSD. It may have probably been because of earlier remarks from BOE Governor Mark Carney. Remember that last week he hinted that the central bank still has options in easing monetary policy even further. This means that economic data from the UK will be looked as closely as they could trigger further easing from the BOE.
UK GDP Due Today
With that said, the UK GDP report for November could spark volatility on GBPUSD. Today, at 9:30 am GMT, the report is anticipated to come in 0.0% for the month. Along with it, the manufacturing production report will be released. It is anticipated to come in at -0.3%.
Positive data could help the pound find some bids in today’s trading. However, negative figures could raise concerns about the health of the economy and send GBPUSD even lower.
On the 4-hour time frame, we can see that GBPUSD still has some room to trade lower and still maintain its recent uptrend. Connecting the lows of November 8, November 22, November 27, and December 24, trend line support seems to fall around 1.2989. This price has previously served as resistance too. Reversal candles at this price could indicate that GBPUSD may soon rally to last week’s highs at 1.3170. On the other hand, a strong bearish close below the trend line could mean that GBPUSD is on its way to near-term support at its December 24 lows at 1.2923. However, if the UK GDP and manufacturing production reports sorely miss forecasts, support at that price may not hold. We can then look to the currency pair’s November 27 lows at 1.2827 as the next floor.