Gbpusd rises slightly amid mixed economic indicators in UK and US

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.16%	20.8 Pips
Week to-date	0.67%	84.6 Pips
December	0.11%	13.7 Pips

Upcoming key events (London Time)

Wed 07:00 AM GBP Consumer Prices Index (CPI) (12-mth)
Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD Interest Rate Projections
Thu 12:00 PM GBP Bank of England Interest Rate Decision (Bank Rate)
Thu 01:30 PM USD GDP annual rate | Q3

What happened lately

In the United States, the recent economic indicators reveal a mixed picture. Industrial production saw marginal improvement in November, reaching a negative rate of -0.1% compared to October’s -0.3%. This slight upturn suggests a modest rebound in manufacturing activities, though the figure remains in contraction territory. On the consumer front, retail trade experienced more robust growth than anticipated, with a 0.7% increase in November compared to October’s 0.4%, as reported by the Census Bureau. However, this growth contrasts with retail trade excluding automobiles, which remained static at 0.2%. The New York Empire State Manufacturing Index showed a significant downturn, plummeting to 0.2 points in December, a stark decrease from November’s 31.2 points, as stated by the New York Fed, indicating potential challenges in manufacturing sentiment.

In the United Kingdom, the labor market presented some concerning trends. The claimant count rate in November rose, yet the exact percentage is not provided, compared to the previous 4.6% figure, according to the Office for National Statistics. The employment change reported a decline to 173,000 in October from September’s 219,000. However, wage growth appears to show strength, with average earnings including bonuses increasing to 5.2% in October from a revised 4.3% figure in September and average earnings excluding bonuses rising to 5.2% from 4.9%. Despite these wage gains, the ILO unemployment rate remained steady at 4.3% over the three-month period ending in October. The claimant count change reflected a small increase to 0.3K in November, contrasting with the previous downward revision to -10.9K. These mixed labor market dynamics suggest underlying economic instability.

Regarding the GBPUSD exchange rate, the latest data offered diverging economic paths for the U.S. and U.K. The slight rise of GBPUSD by 0.16% to 1.27120 on Tuesday could be influenced by various factors including the UK’s solid wage growth despite mixed employment data and the U.S. manufacturing sector’s softer performance as seen in the Empire State Manufacturing Index. Looking forward, key economic events such as the U.K. Consumer Prices Index, the U.S. Fed interest rate decision, and BOE’s interest rate decision will heavily influence market sentiment. Strong U.K. CPI data or a dovish Federal Reserve stance could further support the GBP, while higher U.S. interest rates may bolster the USD, potentially impacting GBPUSD dynamics.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday rose 0.16% to 1.27120. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for GBPUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.27385 with break above could target R2 at 1.27651 or figure level area. While towards the downside, we are looking at daily low of 1.26656 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.27286 may suggest continuation after recent positive movement.

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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