Gbpusd Needs To Reclaim Resistance Scotiabank

last updated on

Gbpusd Needs To Reclaim Resistance Scotiabank

Gbp/Usd Needs To Reclaim 1.2820 Before Turning Higher

The GBP/USD is going through a corrective phase after the release of the UK's recent wage data. According to Scotiabank, the recent dip in the GBP/USD has all the signs of a correction wave which means there's still a chance of bullish revival.

The data from the UK showed that average weekly earnings were near 5.6% during November, December, and January. The data from the earlier period showed a reading of 5.8%, which implies that the recent reading was soft.

Uk's Labor Market Prints Soft Numbers

Another important metric, 'ex-bonus', is near 6.1% while the forecast was for 6.2%. Once again, the metric missed the forecast by 0.1%, which doesn't paint a good picture of the UK labor market.

According to Scotiabank, the data shows that the labor market has become weak due to consistent periods of higher interest rates. Although it is not good news for UK consumers, the policymakers will likely welcome the development as it signifies a slowdown in inflation as well.

look at the GBP/USD shows that the decline from last week continues even today. However, Scotiabank believes that it doesn't essentially mean a bearish phase. In fact, it has all the signs of a correction wave, which could prove to be true if the cable can reclaim the 1.2815 - 1.2820 region.

As long as GBP/USD can manage to get above the region (1.2815 - 1.2820), the chances of a bullish revival remain on the card.

Any more downside in the cable means the traders will have to watch out for the support near the 1.2770, 1.2765, and 1.2750.

While the UK labor market has shown soft readings, let's not forget that not everything is great on the US side as well. The recent unemployment reading from the USA has gone up which implies a slow inflation.

At the end of the day, the fate of the GBP/USD will likely continue to hang in the balance until we get a rate cut decision from either bank (US Fed or BoE).

Trending Stories