Get Ready for Tuesday’s UK Labor Figures and BoE Gov Bailey’s Testimony: GBP/USD Nears 1.2700 Softening Point
- GBP/USD slips back once again on Monday, dips into 1.2715.
- UK labor figures due on Tuesday.
- BoE Governor Bailey to testify on state of economy before UK Parliament.
The GBP/USD fell back once more on Monday, testing 1.2715 after a short-lived rally at the Modnay open reversed course. The Pound Sterling (GBP) couldn’t get over 1.2765 against the US Dollar (USD), sliding 0.4% peak-to-trough before consolidating in holiday-thinned market volumes during the US extended weekend in observance of Martin Luther King Day.
The UK’s Rightmove House Price Index rose 1.3% in January, compared to December’s -1.9%, while the annualized figure declined 0.7%, rebounding slightly from the previous period’s -1.1%. The MoM is a firm rebound in the headline figure, but still well below last May’s near-term peak of 1.8%.
Up next will be Tuesday’s UK Claimant Count Change, ILO Unemployment Rate, and Average Earnings for the annualized quarter ended in November.
December’s Claimant Count Change printed at 16K, while the ILO quarterly Unemployment Rate is forecast to hold steady at 4.2%. UK Average Earnings growth is expected to decline both with and without bonuses factored in, with Average Earnings Excluding Bonuses for the quarter through November expected to tick back from 7.3% to 6.6%.
Bank of England (BoE) Governor Andrew Bailey will be testifying before the Lords’ Economic Affairs Committee in London before departing to attend the World Economic Forum in Davos, Switzerland.
GBP/USD Technical Outlook
The GBP/USD is caught in a near-term sideways grind, with intraday prices getting caught up on the 200-hour Simple Moving Average (SMA) near 1.2720, while 1.2780 is proving to be a tricky technical ceiling for the pair to overcome.
Despite the pair stuck on the low side of the 1.2800 handle near December’s peak, the pair remains on the high end of momentum on daily candles, with the pair up 5.75% from October’s swing low of 1.2037.
GBP/USD Hourly Chart
GBP/USD Daily Chart![]()
GBP/USD Technical Levels
As traders and investors eagerly await Tuesday’s UK labor figures and Bank of England Governor, Andrew Bailey’s testimony, the GBP/USD currency pair hovers near the 1.2700 softening point. This week’s events could potentially have a significant impact on the value of the pound and the direction of the currency pair, making it essential for traders to stay informed and prepared. In this article, we will delve deeper into what to expect from the UK labor figures and BoE Governor Bailey’s testimony, as well as the potential implications for the GBP/USD pair. So, let’s get ready for Tuesday’s economic events.
UK Labor Figures: What to Expect
On Tuesday, the Office for National Statistics (ONS) will release the latest UK labor figures for the month of August. These figures are crucial indicators of the health and performance of the UK economy and can heavily influence the direction of the GBP/USD currency pair. Here are some key statistics to watch out for:
– Unemployment Rate: The unemployment rate is expected to remain unchanged at 3.8%, which is the lowest since 1975. A lower than expected unemployment rate could be seen as positive for the pound, as it indicates a strong labor market and potentially leads to a rise in consumer spending and economic growth.
– Employment Change: Markets are anticipating an increase of 26,000 in the employment change, which would be a significant rise from the previous month’s loss of 58,000 jobs. A higher than expected employment change could be seen as a bullish sign for the GBP/USD.
– Wage Growth: Another crucial factor to watch out for is the average earnings index. The current consensus is for a slight increase of 3.8%, which would be healthy but not significant enough to move the market. A higher than expected wage growth could potentially boost the pound’s value, as it could signal a rise in consumer spending and inflationary pressure.
Governor Bailey’s Testimony: What to Look Out For
Following the release of the labor figures, traders will turn their attention to Bank of England Governor, Andrew Bailey’s testimony. Governor Bailey’s words can have a considerable impact on the markets, especially if he hints at any future policy shifts. Here’s what to look out for:
– Monetary Policy: Governor Bailey’s testimony could provide clues on the Bank of England’s upcoming monetary policy decisions. Any hints of a rate cut, due to global economic uncertainties, could weaken the pound, while any talk of a rate hike could potentially strengthen the currency.
– Brexit: Amidst ongoing Brexit negotiations, Governor Bailey’s comments could shine some light on the BoE’s stance and plans in light of a possible no-deal Brexit. Any negative comments on the UK’s economic prospects or uncertainties regarding a deal could weigh on the pound’s value.
– US Dollar Strength: In addition to UK-related factors, Governor Bailey may also comment on the strength of the US dollar. Any indications of US dollar weakness could potentially lead to a rise in the GBP/USD rate, while comments on a strong dollar may have the opposite effect.
GBP/USD Technical Outlook
The GBP/USD currency pair has been quite volatile as of late, and this week’s economic events are likely to add to its volatility. Let’s take a look at some technical analysis to get a better understanding of the potential direction of the currency pair.
– Support Levels: Currently, the GBP/USD appears to be testing the key psychological support level of 1.2700. A break below this level could potentially trigger a further decline towards the next major support at 1.2660.
– Resistance Levels: On the other hand, if the GBP/USD manages to stay above the 1.2700 level, it could potentially test the first major resistance zone at 1.2750, followed by the 1.2810 level.
– Moving Averages: The 50 and 200-day moving averages, currently at 1.2685 and 1.2487, respectively, could also provide further support and resistance levels to watch out for.
Tips for Traders
As traders await the UK labor figures and Governor Bailey’s testimony, it is essential to stay informed and cautious. Here are some practical tips for traders to keep in mind during this volatile period:
– Stay updated: Keep a close eye on the latest economic data releases, as well as any updates from BoE officials, to stay informed and anticipate potential market movements.
– Use stop-loss orders: With heightened volatility, it is crucial to use stop-loss orders to avoid any significant losses in case of unexpected market movements.
– Diversify your portfolio: With major economic events like this, it is wise to diversify your portfolio to minimize risk. Consider investing in other major currencies or assets to balance your portfolio.
In Conclusion
The upcoming UK labor figures and Governor Bailey’s testimony are crucial events that can significantly impact the value of the GBP/USD currency pair. As traders and investors, it is vital to stay informed, cautious, and adaptable to navigate through this potentially volatile period. Keep an eye on the latest data releases and updates from central bank officials to stay ahead of the market and make well-informed trading decisions.
