Bearish View
Sell the GBP/USD and add a take-profit at 1.3310 (S1).
Add a stop-loss at 1.3500.
Timeline: 1-2 days.
Bullish View
Buy the GBP/USD and add a take-profit at 1.3550.
Add a stop-loss at 1.3350.
The GBP/USD pair was little changed in early trading as investors waited for the latest UK jobs and inflation data. The pair will also react to the latest American retail sales numbers that will come out in the afternoon session. It is trading at 1.3437, which is about 0.60% above the lowest level last week.
UK Jobs and Inflation Data
The Office of National Statistics (ONS) will publish the latest UK jobs data in the morning session. The numbers are expected to show that the country’s economy continued to add jobs in September.
Precisely, data by Reuters show that the economy is expected to have added more than 185k jobs in the three months to September. The unemployment rate is expected to have dropped from 4.5% in August to 4.4% in September.
At the same time, analysts expect the data to show that wages remained steady in September as the economy continued to recover.
These numbers will come at a time when political temperature between the EU and the UK is rising. The UK has asked the EU to renegotiate the Northern Ireland part of the Brexit deal that Boris Johnson signed a year ago. Failure to which, the UK has threatened to invoke article 16 and implement tariffs on European goods. Such action will have negative implications on the British economy.
Later today, the GBP/USD will react to the latest American retail sales numbers. Economists expect that the data will show that the country’s sales rose from 0.7% to 1.1% on a month-on-month basis. Core sales, which excludes volatile food and energy products, are expected to have risen from 0.8% to 1.0%.
Meanwhile, traders will also be focusing on the important UK inflation numbers that will come out on Wednesday. The data will likely show that the country’s inflation rose to more than 4% in October.
GBP/USD Forecast
The GBP/USD pair has made an uneasy recovery in the past two trading days. It has managed to rise from a low of 1.3352 to a high of 1.3440. The pair has risen above the October low of 1.3415. It is also approaching the standard pivot point and is attempting to move above the 25-period moving average.
Therefore, the pair will likely resume the bearish trend ahead or after the UK jobs numbers. If this happens, the next key support level will be at the S1 point at 1.3320.
