GBP/USD. May 16. Unemployment in the UK is gaining momentum
May 16, 2023 2:23 pm
On the hourly chart, the GBP/USD pair sharply dropped on Tuesday following the release of British statistics but quickly recovered and rose to 1.2546. A rebound of quotes from this level will favor the US currency and the resumption of the fall toward the Fibonacci level of 100.0% (1.2447). Fixing the pair above the level of 1.2546 will increase the chances of continued growth toward the next corrective level of 127.2% (1.2623).
The background information on Tuesday was interesting for the British currency as well. In the morning, several reports on wages and unemployment were released at once, which made traders trade more actively. The unemployment rate in March rose from 3.8% to 3.9%. As traders expected, the number of claims for unemployment benefits increased by 46 thousand instead of dropping by 15 thousand. Wages grew by 5.8%, which matched the forecast. Overall, the statistics package can be considered negative for the pound. Thus, its fall in the first half of the day was expected, but the further rapid recovery is inexplicable. Bullish traders showed today that they would not give up without a fight, but earlier, they lost the trend as the pair made a close below the trend line. I expect a rebound from the 1.2546 level and a resumption of the fall.
In general, the British economy now leaves many questions unanswered. Economic indicators continue to decline, but a recession has been avoided. The Bank of England raised the rate for the twelfth time in a row, but it has recently sent too many signals about the imminent end of tightening monetary policy. Traders either do not believe in the end of this program or ignore this point. The pound does not show a particular desire to fall, even with several sell signals forming for a month now.
On the 4-hour chart, the pair made a fall to the level of 1.2441 and rebounded from it. Thus, a reversal was made in favor of the pound, with the potential for resuming an upward trend toward the Fibonacci level of 100.0% (1.2674). The pair’s rate-fixing below the level of 1.2441 will favor the US currency and the resumption of the fall towards the next corrective level of 127.2% (1.2250). There are no emerging divergences observed today in any indicator.
Commitments of Traders (COT) report:
The sentiment of the “non-commercial” traders category became more “bullish” over the last reporting week. The number of long contracts in the hands of speculators increased by 12,900 units and the number of short ones – by 9,437. The overall sentiment of major players remains fully “bullish” (it was “bearish” for a long time), but the number of long and short contracts is now almost the same – 71.5 thousand and 67 thousand, respectively. The pound continues to grow predominantly, although very few factors support buyers. Since the ratio of long and short is almost equal, the pound cannot be considered overbought. The prospects for the pound remain good, but in the near future, a fall can be expected from it, as it has been growing for an extended period.
News calendar for the US and the UK:
UK – Average earnings level, including bonuses (06:00 UTC).
UK – Unemployment rate (06:00 UTC).
UK – Change in the number of unemployment benefit claims (06:00 UTC).
USA – Retail sales volume (12:30 UTC).
USA – Industrial production volume (13:15 UTC).
On Tuesday, the calendar of economic events contained several more interesting entries. The influence of the information background on the mood of traders for the remainder of the day will be present.
GBP/USD forecast and trader advice:
I advise new pound sales when rebounding from 1.2546 on the hourly chart with a target of 1.2447. Purchases of the pound were possible when rebounding from the level of 1.2447 on the hourly chart with the target of 1.2546, which was worked out. When closing above the level of 1.2546, you can stay in purchases.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair sharply dropped on Tuesday following the release of British statistics but quickly recovered and rose to 1.2546. A rebound of quotes from this level will favor the US currency and the resumption of the fall toward the Fibonacci level of 100.0% (1.2447). Fixing the pair above the level of 1.2546 will increase the chances of continued growth toward the next corrective level of 127.2% (1.2623).
The background information on Tuesday was interesting for the British currency as well. In the morning, several reports on wages and unemployment were released at once, which made traders trade more actively. The unemployment rate in March rose from 3.8% to 3.9%. As traders expected, the number of claims for unemployment benefits increased by 46 thousand instead of dropping by 15 thousand. Wages grew by 5.8%, which matched the forecast. Overall, the statistics package can be considered negative for the pound. Thus, its fall in the first half of the day was expected, but the further rapid recovery is inexplicable. Bullish traders showed today that they would not give up without a fight, but earlier, they lost the trend as the pair made a close below the trend line. I expect a rebound from the 1.2546 level and a resumption of the fall.
In general, the British economy now leaves many questions unanswered. Economic indicators continue to decline, but a recession has been avoided. The Bank of England raised the rate for the twelfth time in a row, but it has recently sent too many signals about the imminent end of tightening monetary policy. Traders either do not believe in the end of this program or ignore this point. The pound does not show a particular desire to fall, even with several sell signals forming for a month now.
On the 4-hour chart, the pair made a fall to the level of 1.2441 and rebounded from it. Thus, a reversal was made in favor of the pound, with the potential for resuming an upward trend toward the Fibonacci level of 100.0% (1.2674). The pair’s rate-fixing below the level of 1.2441 will favor the US currency and the resumption of the fall towards the next corrective level of 127.2% (1.2250). There are no emerging divergences observed today in any indicator.
Commitments of Traders (COT) report:
The sentiment of the “non-commercial” traders category became more “bullish” over the last reporting week. The number of long contracts in the hands of speculators increased by 12,900 units and the number of short ones – by 9,437. The overall sentiment of major players remains fully “bullish” (it was “bearish” for a long time), but the number of long and short contracts is now almost the same – 71.5 thousand and 67 thousand, respectively. The pound continues to grow predominantly, although very few factors support buyers. Since the ratio of long and short is almost equal, the pound cannot be considered overbought. The prospects for the pound remain good, but in the near future, a fall can be expected from it, as it has been growing for an extended period.
News calendar for the US and the UK:
UK – Average earnings level, including bonuses (06:00 UTC).
UK – Unemployment rate (06:00 UTC).
UK – Change in the number of unemployment benefit claims (06:00 UTC).
USA – Retail sales volume (12:30 UTC).
USA – Industrial production volume (13:15 UTC).
On Tuesday, the calendar of economic events contained several more interesting entries. The influence of the information background on the mood of traders for the remainder of the day will be present.
GBP/USD forecast and trader advice:
I advise new pound sales when rebounding from 1.2546 on the hourly chart with a target of 1.2447. Purchases of the pound were possible when rebounding from the level of 1.2447 on the hourly chart with the target of 1.2546, which was worked out. When closing above the level of 1.2546, you can stay in purchases.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: