The recent release of UK labour market data came as a positive surprise, with employment growth surpassing expectations and unemployment benefit claims lower than forecasted. Analysts from ING and Capital Economics both agree that this data could influence the Bank of England’s decision on interest rates. Initially, the pound saw a bullish impulse, with GBP/USD rising above 1.3100. However, the pair retraced back towards its initial levels, indicating a struggle for bulls to capitalize on the strong data.
Bearish Signals in Technical Analysis
Technical analysis of GBP/USD reveals several bearish signals that could impact the pair’s movement in the coming days. The failure to maintain a level above 1.314, a bearish engulfing pattern at the market’s peak, and a long upper wick on a recent candlestick all suggest a potential downward trend. Bulls may find temporary support from the median of the linear regression channel, but the overall sentiment seems to be leaning towards a bearish outlook.
US Inflation Data to Determine Future Movement
The direction of GBP/USD in the near future may heavily depend on the US inflation data set to be released soon. The Consumer Price Index (CPI) figures will be crucial in shaping market expectations and could either reinforce the bullish sentiment or strengthen the bearish outlook. Traders should closely monitor this data release to gauge the impact on GBP/USD and plan their trading strategies accordingly.
While the initial reaction to the positive UK labour market data was optimistic, the technical analysis and upcoming US inflation data paint a more nuanced picture. Traders should exercise caution and remain vigilant in monitoring market developments to make informed decisions. The FXOpen brand provides valuable insights and opportunities for forex traders, emphasizing the importance of staying informed and adapting to changing market conditions for successful trading.