GBP/USD is rising on Strong Claimant Count – Focus shifts on US CPI Data
GBP/USD Fundamental Analysis
Today, the GBP/USD currency pair gained upward momentum and reversed all losses from the past few days.
UK Claimant Count Change
According to data released on Tuesday, February 14, the claimant Count Change decreased by -12.9K in January 2023 compared to the prediction of 17.9K. The figures showed that 12.9K fewer individuals got unemployment benefits. Thus, GBP/USD experienced high bullish pressure after the release of this report.
UK Average Earnings Index 3m/y and Unemployment Rate
Additionally, the UK’s average weekly earnings index, including bonuses, reported 5.9% 3Mo/YoY in December. It is down from 6.5% the previous month and the 6.2% forecast. The average weekly wages in the UK, excluding bonuses, were 6.7% 3Mo/YoY in December. It is up from 6.5% the previous month and 6.5% predicted. Hence, the forex pair GBP/USD moved higher. The ILO Unemployment Rate remained constant for three months to December, at 3.7%. It remained unchanged, as expected.
These recent events helped GBP/USD, including a decline in January’s Claimant Count Change and solid readings for the month’s Average Earnings Excluding Bonus.
Upcoming US CPI
Additionally, the US consumer price index (CPI), scheduled for today’s afternoon, is a significant factor for USD investors. Analysts say inflation will continue to fall but at a slower rate than in earlier reports. However, if the CPI softens more than anticipated, it might discourage bets on the Federal Reserve, raising interest rates and weakening the US dollar.
Currently, GBP/USD is trading at $1.2195, up 0.49 from the previous day. The exchange rate between the US dollar and the pound may fluctuate significantly today due to several extremely important data releases.
GBP/USD Technical Analysis
The technical outlook of GBP/USD in the H4 chart shows that the price is rising towards a crucial resistance level at 1.22361. It is the same level where the 50-Day SMA is standing. If the bull’s power remains supportive of the currency pair and breaches above this level, it will accelerate the bullish momentum towards the second resistance at 1.23103.
The Technical Indicators are also supporting the bullish signals. The Moving Average Convergence and Divergence (MACD) histogram above the red signal line, along with Stochastic Oscillator in the overbought zone, suggests a strong buying trend in the market. Furthermore, the Relative Strength Index (RSI) is also entering the overbought zone with a reading of 64.83, backing the green signals. Meanwhile, the 20-Day Simple Moving Average line (light purple) is also cutting the 50-Day SMA line (pink) from below, confirming a potential price increase ahead.
Given the outlook, it seems like the forex pair GBP/USD will keep moving upward for a while and might reach the 1.23990 level. However, the upcoming crucial US CPI data is up next to release in the American trading session, which can impact the prices further.
Daily Technical Levels:
Pivot Point: 1.2106