GBP/USD. 2 reasons why the British pound rose by 1.5% on Monday
- The GBP/USD price rose by more than 1.5% on Monday.
- This happened as investors reacted to the latest US non-farm payrolls data.
- It also rose after the robust UK house price index data.
The GBP/USD pair surged by more than 1.5% to the highest level since February 25 as the market reflected on the rising house prices in the UK and the weak US dollar. It is trading at 1.4120, which is 3.3% above the lowest level since April 12.
UK house prices rise
The UK economy is recovering at a faster rate than most analysts were expecting. The most recent data revealed that the economy’s unemployment rate declined to 4.9% in March. In contrast, the US unemployment rate rose from 5.9% in March to 6.1% in April.
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The UK housing sector has also been robust because of the relatively low interest rates and the stamp duty holiday by the Boris Johnson administration. Data released on Monday revealed that house prices surged at the fastest pace in five years.
Precisely, data by Halifax showed that the price rose by 1.4% in April to 258,000 pounds. Indeed, the price of an average price has risen by 20,000 pounds since the pandemic started. Still, there are concerns that the sector will start slowing down as the government ends its support.
The GBP/USD has also jumped because of the weaker US dollar. The dollar sell-off accelerated today as forex traders continued to price in a more relaxed Federal Reserve after the weak jobs numbers that were published on Friday. The data showed that the economy added just 266,000 in April while the unemployment rate rose.
This week, the GBP/USD will be affected by the latest US consumer inflation numbers scheduled for Wednesday this week and retail sales set for Wednesday. The pair will also react to the latest UK GDP that will come out on Wednesday. Analysts expect the data to show that the economy contracted by 6.1% in the first quarter.
The GBP/USD pair was forming a symmetrical triangle pattern last week, as shown in the four-hour chart below. The triangle reached its confluence level on Friday, leading to a major bullish breakout. Indeed, the price is more than 1.25% above the triangle confluence zone. It has also moved above the 25-day and 15-day exponential moving averages. It has also moved above the 23.6% Fibonacci retracement level. Therefore, while a short pullback is possible, the pair will likely continue rising as bulls target the next key resistance at 1.4150.