The U.K. just printed strong jobs numbers!
Will this lead to a short-term reversal for GBP/USD?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/USD’s breakout for pullback opportunities. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
NY manufacturing index slumps to -11.6 in May vs. expected drop to 15.5
Statistics Canada says higher prices lifted manufacturing (+2.5%) and wholesale sales (+0.3%) in MarchRBA minutes: Central bank considered raising cash rate by 15bp, 25bp, or 40bp
RBA minutes: Inflation peak at 6% by the end of 2022
China’s Shanghai aims to end COVID lockdown by June 1
Asia markets rise on hopes of easing China tech crackdown
UK unemployment falls 3.7%, the lowest level in nearly 50 years
UK jobs data shows more job openings than people out of work for the first time on record
UK real wage growth decreased as higher inflation hurt consumers’ purchasing power
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone’s quarterly employment change at 9:00 am GMT
Eurozone’s flash quarterly GDP at 9:00 am GMT
U.S. retail sales at 12:30 pm GMT
U.S. industrial production at 12:30 pm GMT
Fed Gov. Powell to talk at an event at 6:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/USD
Asian session traders felt like taking risks today thanks to optimism that Shanghai will soon end its lockdown measures and China easing up on its crackdown on tech.
European session traders look on track to pick up the risk-friendly theme especially after the U.K.’s labor market data mostly surprised to the upside.
The unemployment rate dipped from 3.8% to a near 50-year low of 3.7% as fewer workers participated in the market. Employment also rose by 83,000 in Q1 2022, which is waaay above the 5,000 figure that markets had expected.Last but not least, wage growth exceeded expectations at 7% y/y even though it’s still below the country’s inflation rate.
Will today’s report bust GBP/USD from its downtrend?
Note that Cable has already broken above the 100 and 200 SMA and is currently testing the 1.2400 area of interest on the 1-hour time frame.
Continued risk-taking and GBP strength could push GBP/USD to its 1.2640 monthly highs. Heck, we could even see the 100 SMA cross above the 200 SMA!
Before you buy GBP/USD like there’s no tomorrow, though, you should also know that the U.S. will print its April retail sales activity.
Word around is that we’ll see a higher headline figure but that the core numbers will reflect slower growth.
A better-than-expected report would give the Fed more confidence to maintain its hawkish tightening schedule.
If traders choose to focus on risk-taking, however, then a strong release could extend GBP/USD’s upside momentum.