- Britain’s jobless figures rose, reducing pressure on the BOE to raise rates.
- The UK jobs data could prompt the BOE to adopt a more cautious approach.
- US President Joe Biden expressed confidence in reaching a deal over the US debt ceiling.
Today’s GBP/USD price analysis is bearish. The pound experienced a decline on Tuesday as Britain’s jobless figures rose, implying that fewer rate increases by the Bank of England may be necessary in the following months to curb inflation.
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Sterling’s value against the dollar dropped by up to 0.5%, reaching $1.2467 before reversing the move. This followed the unexpected increase in the unemployment rate to 3.9% during the three months leading up to March.
Current market assessments suggest the likelihood of at least one more 25 basis point rate increase by the Bank of England, with a strong possibility of further hikes. However, analysts noted that this data could prompt the BOE to adopt a more cautious approach.
Meanwhile, US President Joe Biden expressed confidence in reaching a deal during his anticipated meeting with congressional leaders later on Tuesday. However, Republican House of Representatives Speaker Kevin McCarthy stated that the two sides remained significantly divided.
The House Republicans, who currently hold the majority, have clarified that they will not support raising the debt ceiling unless Democrats agree to significant spending reductions. Failing to increase the debt limit could lead to a default, causing a severe economic downturn.
Economists warn that a potential US default would result in a recession and create turmoil in global financial markets. Such uncertainty would likely boost the safe-haven dollar and pressure the pound.
GBP/USD key events today
Investors are expecting sales data from the US that will give more insight into the state of the US economy. It will do this by showing consumer spending and demand in the country.
GBP/USD technical price analysis: Bulls push against 30-SMA resistance.
GBP/USD has had a whiplash move in the 4-hour chart, making a big wicked candle. However, the price remains in a downtrend because it is still below the 30-SMA. In a downtrend, the 30-SMA acts as strong resistance.
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Therefore, we might see bears return soon to continue the downtrend by taking out the 1.2451 support level. The bearish bias will only change if the price breaks above the 30-SMA and the 1.2575 resistance level.
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