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GBP/USD awaits labor data

Kira Iukhtenko, analyst at FX BAZOOKA

Sterling is trading in the green on Monday, but holds below the Friday’s high of $1.6460. At the end of the past week cable found strong support at $1.6300 and soared by more than 150 pips on upbeat retail trade data. UK retail sales rose by 2.6% in December, surpassing the +0.3% forecast. This was the biggest year over year rise in a decade: this Christmas season was extremely successful for the UK retailers.

This week markets will be focused on the UK labor market data on Wednesday. Unemployment is expected to decline from 7.4% to 7.3%, moving toward the BoE 7% threshold. Jobless claims are forecasted to extend contraction, falling by 32.3K in December (November: -36.7K). Labor market improvement will definitely support the sterling, rising expectations of a hawkish BoE. The central bank will also release minutes from its January policy meeting on Wednesday.

GBP/USD extends the careful bearish correction from the Jan. 2 high ($1.6590). The technical picture is pretty uncertain these days. Only a clear break from the $1.6300/6470 range will lead to a more sustained move. 

Chart. H4 GBP/USD

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