Inflation Heats Up Again! GBP/USD Set to Fall Further

Summary:

Given the lackluster U.S. employment data released last week, market expectations for a Fed rate hike have eased, and dollar bulls appear to remain cautious.

SELL GBPUSD

EXP

TRADING

1.33475

Entry Price

1.28000

1.35000

1.33368 -0.00088 -0.07%

0.0

Pips

Flat

1.28000

Exit Price

1.33475

Entry Price

1.35000

Fundamentals

The British market experienced a brief period of unease after Andy Burnham, the only Labour MP to publicly express his desire to replace outgoing Prime Minister Keir Starmer, gained support within the party and may challenge the prime minister’s leadership. Burnham had previously argued that the country must “break free from its dependence on the bond market,” sparking concerns among some investors that he might renege on the government’s borrowing commitments.

U.S. June nonfarm payroll data showed that, despite a decline in the unemployment rate, hiring slowed significantly in June, dampening the initial momentum of job growth this year. According to data released Thursday by the U.S. Bureau of Labor Statistics, nonfarm payrolls increased by 57,000 in June (market expectations were 110,000), following a downward revision of 74,000 for the previous two months. The decline in the unemployment rate was due to a sharp drop in the labor force participation rate; when the labor force participation rate falls, it means that a portion of the population has withdrawn from the labor market.

Technical Analysis

On the daily chart, the GBP/USD pair shows the Bollinger Bands widening downward, with moving averages diverging downward, indicating that the downtrend remains intact. The RSI stands at 52, suggesting that market participants are mostly taking a wait-and-see approach. On the four-hour chart, the Bollinger Bands are widening upward, moving averages are diverging upward, and the MACD fast and slow lines have formed a death cross, indicating a high probability of another decline. The RSI stands at 61, suggesting that market participants are predominantly buying. The trading strategy is to sell on rallies.

Inflation Heats Up Again! GBP/USD Set to Fall Further_1

Inflation Heats Up Again! GBP/USD Set to Fall Further_2

Trading Recommendation

Trading Direction: Sell

Entry Price: 1.334

Target Price: 1.28

Stop-Loss Price: 1.35

Support Levels: 1.32, 1.3, 1.28

Resistance Levels: 1.37, 1.38, 1.41

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Inflation Heats Up Again! GBP/USD Set to Fall Further

Risk Disclosure