GBPUSD falls 0.29% as economic data shows mixed signals from US and UK

GBPUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.29%	-36.9 Pips
Week to-date	-1.62%	-208.8 Pips
November	-1.47%	-189.4 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)
Thu 08:00 PM USD Federal Reserve Chair Jerome Powell speech
Fri 07:00 AM GBP GDP (3-mth)
Fri 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

In the United States, the Monthly Treasury Budget Statement for the month of October revealed a fiscal deficit of $257 billion, a significant shift from the surplus of $64 billion recorded in September. Additionally, the Consumer Price Index (CPI) inflation rate excluding food and energy sectors remained stable at 0.3% between September and October, according to the Bureau of Labor Statistics. The headline CPI inflation rate increased to 2.6% in October from 2.4% in September, showing rising price pressures. This overall CPI inflation rate for October remained constant at 0.2% month-over-month. Furthermore, the core CPI inflation rate, which excludes food and energy, held steady at 3.3% in October, unchanged from September.

In the United Kingdom, the claimant count rate remained unchanged at 4.7% in October as compared to September, as reported by the Office for National Statistics. Average earnings including bonuses rose significantly to 4.8% for the three months ending in September, a noticeable increase from the revised 3.9% recorded in August. However, average earnings excluding bonuses saw a slight decrease to 4.8% from 4.9% in the same period. The claimant count change witnessed a minor decrease to 26.7K in October from 27.9K in September. Meanwhile, the ILO unemployment rate rose to 4.3% for the three months ending in September, marking an increase from the previous month’s 4%. Employment change in the same period declined significantly to 219K from 373K in August.

These mixed economic indicators from both the U.S. and the U.K. have implications for the GBPUSD currency pair. The U.S.’s increasing inflation rate may lead to expectations of tighter monetary policy, supporting the USD. Meanwhile, the U.K.’s stable claimant numbers and rising earnings could strengthen the GBP. However, the rising U.K. unemployment rate and the significant fiscal deficit in the U.S. could introduce volatility. Ultimately, the forthcoming economic events, such as the GDP report from the U.K. and the Federal Reserve Chair’s speech, are likely to have a pronounced impact on the currency pair. As of the most recent trading session, the GBPUSD decreased by 0.29% to 1.27081.

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What can we expect from GBPUSD today?

GBPUSD on Wednesday dropped -0.29% to 1.27081. Price is below 9-Day EMA while Stochastic is falling.

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 1.26729 with break below could see further selling pressure towards S2 at 1.26378. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.27694 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.26860 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -1.62%.

Key levels to watch out:

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