This is Why the GBPUSD is Setting Itself Up for a Major Breakout

GBPUSD
GBPUSD

The GBPUSD pair dropped by more than 0.26% as traders reacted to the UK employment and car registration data. The pair is trading at 1.2554, which is below yesterday’s high of 1.2650.

UK impressive jobs numbers

The labour market in the United Kingdom improved in May as the country continued to reopen after the April’s lockdowns. That is according to the Office of National Statistics (ONS), which has just released these numbers.

According to the bureau, the unemployment rate remained unchanged at 3.9% during the month. This was better than the 4.2% that analysts polled by Reuters were expecting. In the same month, the average earnings index (plus bonuses) declined by 0.3% which was slightly better than the expected decline of 0.4%. Without bonuses, the earnings rose by 0.7%.

Better, data showed that the claimant count change declined by more than 28,000 in June. That is aftedr rising by more than 566,000 in the previous month.

Meanwhile, car registration numbers in the UK improved in June. Car registrations declined at an annualised rate of 34.9% after dropping by 89% in the previous month. On a MoM basis, the number of registrations rose by a record 618%.

These numbers came a day after we received impressive inflation numbers from the UK and two days after we received excellent GDP and industrial production and manufacturing production numbers.

Later today, the GBPUSD pair will react to the retail sales, initial jobless claims, and the Philadelphia Fed manufacturing index from the US.

GBPUSD technical outlook

The GBPUSD pair is trading at 1.2555. On the daily chart, the price is between the 50% and 61.8% Fibonacci retracement level. This retracement is drawn by connecting the highest and lowest points this year. Also, the price is slightly above the 50-day and 100-day exponential moving averages. Further, the pair has formed a triangle pattern, that is shown in black.

Therefore, with the triangle pattern nearing its peak, I expect that the pair will have a significant break out in the medium-term. As such, the key support and resistance levels to watch for the GBPUSD pair will be 1.2258 and 1.2815 respectively.

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