May 14

GBP/USD trades at around 1.2550 after UK jobs data

GBP/USD struggles to build on Monday's gains and hovers around 1.2550 in the European session on Tuesday. The data from the UK showed that the Unemployment Rate edged higher to 4.3% in the three months to March as forecast, failing to trigger a reaction.

Technical Overview

The 200-day Simple Moving Average (SMA) stays intact as near-term resistance at 1.2540. In case GBP/USD rises above that level and confirms it as support, 1.2590-1.2600 (Fibonacci 50% retracement of the latest downtrend, psychological level) could be seen as next resistance before 1.2635 (May 3 high).

On the downside, 1.2500 (psychological level, 100-period SMA on the 4-hour chart) aligns as first support before 1.2450 (Fibonacci 23.6% retracement) and 1.2400 (static level, psychological level).


Fundamental Overview

After fluctuating wildly in the second half of the previous week, GBP/USD seems to have stabilized above 1.2500 at the beginning of the new week. The near-term technical outlook fails to offer directional clues, while the pair struggles to pull away from the 200-day Simple Moving Average (SMA), currently located at 1.2540.

The dovish tone seen in the Bank of England's (BoE) policy statement following the decision to maintain the bank rate at 5.25% on Thursday made it difficult for Pound Sterling  to find demand. The US Dollar (USD) selloff that was triggered by disappointing US data later in the day, however, helped GBP/USD find support and allowed the pair to rise above 1.2500.

BoE Governor Andrew Bailey said that he was optimistic that things were moving in the right direction for a rate cut, adding that they had encouraging news on inflation.

Ahead of the weekend, several Federal Reserve (Fed) officials delivered hawkish remarks and capped GBP/USD upside. Minneapolis Fed President Neel Kashkari repeated his doubts over the restrictiveness of the policy and noted that he can't rule out the possibility of another rate hike this year. Additionally, Fed Board of Governors member Michelle W. Bowman said on Friday that she doesn't see rate cuts as warranted this year, adding that she would want to see a number of months of better inflation data.

The economic calander will not offer any high-impact data releases on Monday. Fed Vice Chair of the Board of Governors Phillip Jefferson and Cleveland Fed President Loretta Mester are scheduled to speak in the early American session. In case these officials stick to a similarly hawkish language, GBP/USD could stay on the back foot. In the early European morning on Tuesday, the UK's Office for National Statistics will release labor market data.