GBP/USD signal ahead of UK jobs and inflation data

By: Crispus Nyaga
Crispus Nyaga
Crispus is a Financial Analyst for Invezz covering the stock, cryptocurrency and forex markets. He’s an experienced analyst with… read more.
on Aug 17, 2021
  • The GBP/USD pair will be in focus as the UK publishes its jobs numbers.
  • The ONS will publish the latest inflation numbers on Wednesday.
  • The pair will also react to the latest Fed chair statement.

The GBP/USD price is under intense pressure ahead of key economic numbers from the United Kingdom. The pair declined to 1.3820 ahead of the latest UK jobs numbers.

UK jobs numbers

The Office of National Statistics (ONS) will provide more colour about the state of the UK economy this week. On Tuesday, the agency will publish the June and July employment numbers. 

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Economists polled by Reuters expect that the UK economy added more jobs in June as the country’s economy reopened. As a result, they expect that the unemployment rate declined from 4.8% in May to 4.7% in June. 

At the same time, they expect that the country’s wages did well during the month as companies battled for talent. Many sectors of the UK economy have struggled to find workers as the economy recovers. As such, the average wages without bonus are expected to rise to 7.4%. With bonuses included, the wages are expected to rise to 8.6%.

The GBP/USD will also be in the spotlight as investors wait for the upcoming UK inflation data. The ONS will publish these numbers on Wednesday. 

In general, analysts believe that the overall consumer prices moderated in July. The headline CPI is expected to have dropped from 2.5% to 2.3% while core CPI is expected to drop to 2.2%. 

The ONS will also release the latest producer price index (PPI) and retail price index. The CPI has moved above the Bank of England target of 2.0% in the past three straight months.

And on Friday, the bureau will release the latest UK retail sales numbers. The data is expected to show that sales moderated slightly in July. The other catalysts for the GBP/USD will be a speech by Jerome Powell and US retail sales numbers. 

GBP/USD analysis

GBP/USD

The GBP/USD pair has been in a downward trend in the past few days. The pair has moved from a high of 1.3876 on August 16 to the current 1.3815. 

On the hourly chart, the pair has managed to move below the 25-period and 15-period exponential moving averages (EMA). At the same time, the Relative Strength Index (RSI) has moved from the overbought level of 75 to 34. The MACD has also been in a downward trend.

Therefore, the pair will likely maintain the bearish trend in the near term. If this happens, the next level to watch will be the lower side of the channel at 1.3790.

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