Daily Analysis For GBP/USD 13-06-2023

Daily Analysis For GBP/USD 13-06-2023

GBP/USD Analysis


Key Points: -


·       Following the release of positive UK Employment data, GBP/USD has made a strong recovery and is now trading near 1.2550.

·       The UK Claimant Count Change has decreased by 13.6K, and the unemployment rate has dropped to 3.8%.

·       It is expected that the US headline Consumer Price Index (CPI) will slow down to 0.2%, while core inflation is likely to remain steady at 0.4%.


Today's Scenario: -


The GBP/USD pair has experienced a positive boost following the release of better-than-expected labor market data by the United Kingdom's Office for National Statistics (ONS) for May. The Claimant Count Change has decreased by 13.6K, surpassing the market's expectation of a decline of 9.6K. In the previous month, the Claimant Count Change had increased by 23.4K. Additionally, the three-month Unemployment Rate for April has declined to 3.8%, lower than the estimated 4.05% and the previous figure of 3.9%.


It is noteworthy that Average Earnings, excluding bonuses, have seen a significant increase of 6.5%, surpassing both market consensus and the previous release of 6.1%. The Bank of England (BoE) has been closely monitoring the rise in earnings as it grapples with persistent inflationary pressures.


UK companies have been facing labor shortages, with Brexit and early retirements contributing to the challenges. To address these shortages, companies have resorted to higher wage payouts.


Considering the resilience exhibited by the UK Employment data, BoE Governor Andrew Bailey is likely to opt for further policy tightening, increasing interest rates by 25 basis points (bps) to 4.75%.


In the Asian session, S&P 500 futures have shown significant gains, reflecting the market's interest in US equities. Investors are hopeful that the Federal Reserve (Fed) will refrain from raising interest rates at this time. However, it should be noted that a hawkish stance cannot be ruled out, given that the inflation rate still exceeds the desired target of 2%.


Ahead of the Fed policy decision, market participants will closely watch the United States Consumer Price Index (CPI) data. The monthly headline inflation for May is expected to grow at a pace of 0.2%, slower than the 0.4% recorded in April. However, the monthly pace of core CPI, which excludes oil and food prices, is anticipated to remain steady at 0.4%.


Diagram of GBP/USD: -

Economic Events: -

Date    Event                                                                                                                Impact    Currency

4:15     (New Zealand) Visitor Arrivals YoY                                                        Low      NZD

5:20     (Japan) BSI Large Manufacturing QoQ                                                Low      JPY

6:00     (Australia) Westpac Consumer Confidence Change                       High     AUD

6:00     (Australia) Westpac Consumer Confidence Index                           High     AUD

7:00     (Australia) NAB Business Confidence                                                 High     AUD

11:30   (Germany) Harmonised Inflation Rate MoM                                        Low      EUR

11:30   (Germany) Harmonised Inflation Rate YoY                                           Low      EUR

11:30   (Germany) Inflation Rate MoM                                                         Medium      EUR

11:30   (Germany) Inflation Rate YoY                                                            Medium      EUR

11:30   (Germany) CPI                                                                                             High      EUR

11:30   (United Kingdom) Average Earnings excl. Bonus (3Mo/Yr)              Low      GBP

11:30   (United Kingdom) Average Earnings incl. Bonus (3Mo/Yr)       Medium      GBP

11:30   (United Kingdom) Unemployment Rate                                               High      GBP

11:30   (United Kingdom) Claimant Count Change                                         High      GBP

11:30   (United Kingdom) Employment Change                                               High      GBP

11:30   (United Kingdom) HMRC Payrolls Change                                           Low      GBP

12:30   (Lithuania) Current Account                                                                    Low      EUR

12:30   (Spain) CPI                                                                                                  High      EUR

12:30   (Spain) Core Inflation Rate YoY                                                              Low       EUR

12:30   (Spain) Harmonised Inflation Rate MoM                                             Low       EUR

12:30   (Spain) Harmonised Inflation Rate YoY                                                Low       EUR

12:30   (Spain) Inflation Rate MoM                                                                     Low       EUR

12:30   (Spain) Inflation Rate YoY                                                                        Low       EUR

13:30   (China) Total Social Financing                                                               Low       CNY

13:30   (China) New Yuan Loans                                                                          Low       CNY

13:30   (China) M2 Money Supply YoY                                                               Low       CNY

13:30   (China) Outstanding Loan Growth YoY                                                Low       CNY

14:10   (Spain) 3-Month Letras Auction                                                             Low       EUR

14:30   (Euro Area) ZEW Economic Sentiment Index                            Medium        EUR

14:30   (Germany) ZEW Economic Sentiment Index                                    High        EUR

14:30   (Germany) ZEW Current Conditions                                                    Low        EUR

14:30   (United Kingdom) 10-Year Treasury Gilt Auction                             Low        GBP

14:40   (Italy) 3-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 7-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 30-Year BTP Auction                                                                  Low         EUR

15:00   (Germany) 5-Year Bobl Auction                                                          Low          EUR

15:15   (Euro Area) ECB Enria Speech                                                            Low          EUR

15:30   (Latvia) Current Account                                                                      Low         EUR

15:30   (United States) NFIB Business Optimism Index                            Low          USD

17:30   (Ecuador) Balance of Trade                                                                 Low          USD

18:00   (United States) Core Inflation Rate MoM                                 Medium          USD

18:00   (United States) Inflation Rate MoM                                                 High          USD

18:00   (United States) Core Inflation Rate YoY                                          High          USD

18:00   (United States) Inflation Rate YoY                                                    High          USD

18:00   (United States) CPI                                                                               High          USD

18:00   (United States) CPI s.a                                                                        High          USD

18:15   (Germany) Current Account                                                                Low          EUR

18:25   (United States) Redbook YoY                                                             Low          USD

19:30   (United Kingdom) BoE Gov Bailey Speech                              Medium         GBP

20:30   (United Kingdom) BoE Dhingra Speech                                         Low          GBP

21:00   (United States) 52-Week Bill Auction                                              Low          USD

22:30   (United States) 30-Year Bond Auction                                            Low          USD

Buy Scenario: -


From a technical standpoint, the rebound of the Cable pair from the support of the short-term DMA at 1.2488 is supported by a positive oscillator, attracting short-term buyers. Nevertheless, the upper boundary of the aforementioned bullish channel, located around 1.2610, serves as a resistance level for further upside movement in the GBP/USD pair.


It is worth noting that several obstacles encountered since late April also pose challenges for GBP/USD bulls around 1.2580.


Even if buyers manage to surpass the mentioned resistance at 1.2610, the yearly high recorded in May around 1.2680 is the final hurdle for the bears. Till we do not advise to buy GBP/USD.


Sell Scenario: -


On the downside, a break below the 10-DMA could quickly lead GBP/USD towards the lower boundary of the mentioned channel, currently near 1.2430. However, an upward-sloping support line originating from early March, located near 1.2420, acts as a potential entry point for sellers. Till then we do not advise selling GBP/USD.


Support and Resistance Level: -

 Support           Resistance  

 S1 1.2462   -  R1 1.2574

 S2 1.2418  -   R2 1.2643

 S3 1.2349  -   R3 1.2686


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