Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2500.
- Add a stop-loss at 1.2850.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2725 and a take-profit at 1.2800.
- Add a stop-loss at 1.2625.
The GBP/USD exchange rate made a bearish breakout below an important support level as focus shifts to the upcoming UK jobs data. The pair dropped to a low of 1.2624 on Monday, the lowest level since June 30th.
UK jobs and US retail sales data
The GBP/USD pair continued falling, mostly because of the strong US dollar. The dollar index rose to $103.20 as the momentum continued. This rally happened as risks to the global economy rose.
The next important news to watch will be the upcoming UK jobs numbers. Economists expect the numbers to show that the unemployment rate remained at 4.0% in July. The key data to watch will be the average earnings numbers.
Analysts expect the data to reveal that wages rose by 7.3% in June from 6.8% in the previous month. Higher wages will put more pressure on the Bank of England (BoE) in its battle against inflation.
The data will come a day before the upcoming UK consumer price index (CPI) data. With wages at an elevated level, analysts believe that inflation remained stubbornly high in July. Precisely, inflation rose by 6.8% and 7.4% in July.
The GBP/USD pair will also react to the upcoming US retail sales data. These numbers are expected to show that spending continued in July. Economists polled by Reuters see core sales dropped by 0.3% on a MoM basis as the headline sales rose by 0.4%.
The biggest news for the pair will be the minutes of the Federal Reserve. These minutes will provide more color about the last meeting.
GBP/USD technical analysis
The GBP/USD pair continued falling this week as the US dollar rebounded. On the daily chart, the pair retreated below the lower side of the ascending channel. It also dropped below the key support level at 1.2843 (June 16th high).
Sterling’s sell-off is being supported by the 25-day and 50-day moving averages while the Relative Strength Index (RSI) dropped below the neutral point. It has moved inside the Ichimoku cloud.
Therefore, the outlook for the pair is bearish, with the next support level to watch will be at 1.2500. The stop-loss for this trade is at 1.2850.
Ready to trade our free trading signals? We’ve made a list of the best UK forex brokers worth using.