GBPUSD has been moving sideways on its 4-hour chart, bouncing off support at the 1.4050 minor psychological mark and finding resistance at the 1.4450 minor psychological level. Price is gearing up for a test of resistance once more.
The moving averages are still oscillating so the consolidation could carry on. If the resistance holds, another test of support could take place. Meanwhile, stochastic is already indicating overbought conditions so buyers may be exhausted and might allow sellers to take over.
However, if price breaks past the range resistance, a rally of at least 400 pips could take place as this is the same height as the rectangle chart pattern. Similarly a break below support
The upcoming UK jobs release could serve as a catalyst for a bounce or a break today. Analysts are expecting to see a drop of 11.9K in joblessness, a smaller reduction compared to the earlier 18K decline. The jobless rate is expected to hold steady at 5.1% while the average earnings index could also stay unchanged at 2.1%.
Stronger than expected data could highlight the resilience of the UK jobs market and a rise in wages could be interpreted as a positive signal for overall inflation. On the other hand, weaker than expected reports could remind traders that the UK economy is already in a weak spot leading up to a potential Brexit.
Data from the US economy has been mostly weaker than expected, with yesterday’s release of building permits and housing starts falling short of expectations. Only the existing home sales report is due today. Tomorrow has the UK retail sales report on tap and a 0.1% drop in consumer spending is eyed.
By Kate Curtis from Trader’s Way