Pound stops the slide

GBP/USD is steady at the start of the week. The pound fell 1.51% last week, marking a third straight week of sharp losses Earlier in the day, GBP/USD touched a low of 1.3009,  as it struggles to remain above the psychologically important 1.30 line, which has held since November 2020.

UK job data expected to improve

The UK releases key job numbers on Tuesday, with expectations of a strong release. Unemployment is expected to fall by 28 thousand, after a drop of 31.9 thousand in January. The unemployment rate is forecast to drop from 4.1% to 4.0%, while wages are projected to climb 3.7% for a second straight month. A strong employment report could give the pound a badly needed boost.

On Friday, the UK posted better than expected numbers, although this wasn’t enough to stem the pound’s slide. GDP for January jumped 0.8% MoM and a sizzling 10.0% YoY. Manufacturing Production for January also rose 0.8% MoM and 3.6% YoY. The strong numbers are further indication that the UK economy continues to perform well.

Investors are looking ahead to the Bank of England’s policy decision on Thursday. The markets are expecting the central bank to hike by a 1/4 point, as inflation remains at its highest level in decades. The BoE has raised rates at the two previous meetings, and it would be unprecedented for the bank to hike three times in a row. Central banks are concerned about stagflation and the turbulent markets, and would like nothing more than to sit on the sidelines and let the markets sort themselves out. The spectre of inflation spiralling to 7 or 8 per cent, however, requires urgent attention, and if the BoE balks and doesn’t raise rates, the pound will likely take it on the chin and fall sharply.

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GBP/USD Technical

  • 1.3075 is a monthly support line. Below, there is support at 1.2962
  • There is resistance at 1.3184 and 1.3328

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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