UK Unemployment Preview: What to Expect of GBP/USD?
Renewed Brexit fears are scaring investors out of Sterling positions ahead of the UK unemployment data, wage growth figure and budget statement release.
Having failed to re-enter falling channel on Monday, the GBP/USD pair was offered yesterday to 1.4134 levels and has extended losses to 1.4084 ahead of the data release today.
Weak data would support BOE rate cut calls
The latest Bloomberg survey put a BOE rate cut probability at 23%, compared to 10% possibility seen a month ago. Furthermore, market based measures too are indicating a higher possibility of a rate cut. BOE rate cut probability could easily rise if Brexit issue takes a ugly turn.
In view of this scenario, a weaker-than-expected UK wage growth figure and a rise in jobless claims/rate could support BOE rate cut calls and weigh over an already weak Pound. In such a case, Cable could make another attempt to break below 1.4079 (Jan 21 low) and extend losses to 1.4032 (23.6% of 1.4669-1.3835).
On the other hand, a sharp rise in wage growth figures and a tightening labor market could help Cable recoup losses and move higher towards 1.4159.
Apart from the economic data sets, markets would also keep a close watch on UK budget statement and latest economic forecasts by Office for Budget Responsibility (OBR).
GBP/USD Technical Levels
The spot currently trades around 1.4117 (Mar 10 low). A break above immediate hurdle seen at 1.4135 (50% of 1.3835-1.4436) would expose 1.4159 (daily high) – 1.4164 (23.6% of 1.5230-1.3835), which if toppled out could see prices re-test 1.4220 (falling trend line hurdle).
On the other hand, a violation of immediate support at 1.4079 (Jan 21 low) could see prices drift lower to 1.4065 (61.8% of 1.3835-1.4436). A break lower would expose 1.4032 (23.6% of 1.4669-1.3835).
(Market News Provided by FXstreet)
