GBP/USD retreats as lockdown worries weigh strong UK jobs data
- The GBP/USD declined after the relatively strong UK jobs data.
- The UK unemployment rate came a day ahead of the latest inflation data.
- The pair will also react to the latest US retail sales and Fed decision.
The GBP/USD declined slightly after the relatively strong UK employment numbers ahead of the country’s May inflation data. The pair dropped to 1.4095, which was slightly below this week’s high of 1.4127.
UK jobs numbers
The UK labour market continued to tighten in April as the country continued to reopen following several days of lockdowns. According to the Office of National Statistics (ONS), the country’s unemployment rate declined from 4.8% in March to 4.7% in March. This was in line with expectations.
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In the same period, the country’s wages continued to rise as companies struggled to find workers. Average earnings plus bonus increased from 4.3% to 5.6%. This was better than the median estimate of 4.9%. Without bonuses, average earnings increased from 4.6% to 5.6%.
These numbers came a day ahead of the important UK inflation data that will set the tone in the upcoming Bank of England (BOE) interest rate decision. Economists polled by Reuters expect the data to show that the headline consumer price index (CPI) declined to 0.3% from 0.6% on a month-on-month basis. They also expect it to rise from 1.5% to 1.8% on a year-on-year basis.
The core consumer price index is expected to rise by 0.3% and 1.5% on an MoM and YoY basis. These numbers come at a time when the UK government decided to extend the lockdown by another four weeks as it deals with the fast-spreading delta variant of the virus.
Looking ahead, economic events in the UK will also have a major impact on the GBP/USD pair. For example, later today, the pair will react to the latest US retail sales and producer price index (PPI). These numbers will come a day ahead of the Fed interest rate decision.
GBP/USD technical analysis
The four-hour chart shows that the GBP/USD has been under intense pressure in the past few weeks. Today, it declined to the important support level at 1.4085, where it has struggled to move below in the past few weeks. The pair has also moved between the middle and lower lines of the Bollinger Bands while the Stochastic Oscillator has moved to the oversold level of 20. Therefore, there is a possibility that the pair will break out lower as bears target the next key support at 1.4050.