Gbpusd drops as us economic data presents mixed signals

GBPUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.44%	-57.3 Pips
Week to-date	0.01%	1.1 Pips
October	-3.11%	-416.3 Pips

Upcoming key events (London Time)

Thu 12:30 PM USD PCE Price Index, excluding food and energy (12-mth)
Fri 12:30 PM USD Nonfarm Payroll Employment

What happened lately

In the United States, the recent economic data shows a slight deceleration in GDP growth for the third quarter, with the GDP flash estimate decreasing to 2.8% from 3.0% in the second quarter, as reported by the Bureau of Economic Analysis. This slowdown is complemented by a decrease in the GDP Price Index from 2.5% in the second quarter to 1.8% in the third quarter, highlighting reduced inflationary pressures. Moreover, the Personal Consumption Expenditures (PCE) excluding food and energy prices decreased to 2.2% in the third quarter flash estimate, down from 2.8% in the previous quarter. Similarly, the overall PCE Price Index also dropped from 2.5% in the second quarter to 1.5% in the third quarter, indicating a broad-based decline in consumer inflation.

Despite these downturns, the housing market showed positive signs, with Pending Home Sales increasing by 7.4% in September, up from 0.6% in August. However, the U.S. labor market faced challenges as indicated by the Job Openings and Labor Turnover Survey (JOLTS) which reported a decrease in job openings to 7.443 million in September, a significant dip from the revised 7.861 million in August. This indicates a softening in labor demand which could have implications for future economic growth.

The impact on the GBPUSD exchange rate was noticeable, as the pair dropped by 0.44% to 1.29593 on Wednesday. The string of U.S. economic data, especially the weaker GDP and inflation figures, could exert downward pressure on the U.S. Dollar, but the tightening labor market conditions provide a counterbalance. Market participants will now keenly watch the upcoming high-impact U.S. events, particularly the PCE Price Index data and the Nonfarm Payroll Employment report. These events are crucial as they could potentially influence the Federal Reserve’s future monetary policy stance, thus impacting the GBPUSD exchange rate further.

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What can we expect from GBPUSD today?

GBPUSD on Wednesday dropped -0.44% to 1.29593. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for GBPUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 1.29162 with break below could see further selling pressure towards S2 at 1.28731. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.30432 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.29366 would indicate selling pressure.

For the week to-date, take note that GBPUSD is mixed as compared to the prior week.

Key levels to watch out:

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