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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