The Pound Came Close to $1.40. We Are Expecting a Report on the Labor Market in the UK

Since the beginning of this week, GBP/USD has stabilized near the key resistance of 1.4000. At the moment, investors have taken a wait-and-see position after a significant rally over the past month. The pound has shown the best results since 2014.

According to the Commitment of Traders, large speculators increased their net long positions in the pound to a maximum over the past 3.5 years ahead of prospects for the Brexit issue and the growth of the UK economy.

British Pound

On Monday, January 22, former Treasury Secretary Jim O'Neal said that the UK economy would likely show solid growth and exceed the expectations of experts. At the same time, some analysts believe that the unstable political situation continues to put considerable pressure on the pound's rate. In the near future, a correction is possible after the 3% growth since the beginning of this year.

This week, the attention of financial market participants will be focused on the report on the UK labor market, which will be published on Wednesday, January 24 at 11:30 (GMT+2:00). These statistics may have an impact on the dynamics of GBP/USD in the short term.

In August-October 2017, the labor market in the UK showed positive changes. The employment rate (the proportion of people aged from 16 to 64 years) was 75.1% compared to the mark of 74.4% a year earlier. The unemployment rate was at the level of 4.3%, which is 0.5% less in the same period last year. Experts expect a rather optimistic report on the labor market. Recent estimates show that in November, the average wage in the UK, including bonuses, will increase by 2.5%. The unemployment rate will remain at the same level of 4.3%. The number of jobless claims will drop by 8.5% to 5400. Positive statistics will contribute to a further strengthening of the UK currency.

UK Unemployment Rate
The analysis of the CME exchange data (Chicago Mercantile Exchange) allowed to distinguish the option levels of major players' interest for January 05 – February 09:
  • The resistance zone – 1.3700-1.3800
  • The support zone – 1.3450-1.3550
  • The option balance level – 1.3625
GBP/USD Pattern

At the moment, the GBP/USD quotes have fixed above the monthly control zone of 1.3700-1.3800, which indicates the power of the buyers. Nevertheless, a technical correction is possible in the near future. A sufficiently strong reversal formation of the price and MACD histogram divergence has been formed in the trading instrument. In the medium term, the GBP/USD currency pair may turn back to the call option level range (1.3700-1.3800).

by JustMarkets, 2018.01.23

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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