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GBP/USD Daily Forecast – Sterling Recovers on Positive UK Jobs Data Following Dip Below 1.3000

After running into resistance late last week, GBP/USD eased back on Monday. However, the UK jobs report has drawn fresh buyers in early trading on Tuesday after a brief drop below the psychological 1.3000 handle.

The employment rate in the UK reached a record high of 76.5%, prompting a move higher in Sterling. Employment was up 0.6% on the year and 0.4% on the quarter. The unemployment rate held steady at 3.8% for a third consecutive reading.

Averages wages were lower compared to the previous year and quarter. However, when adjusted for inflation, wages were estimated to grow 1.4% annually and 1.8% on a quarterly basis.

The British pound was the strongest major currency last week and GBP/USD made a notable recovery after turning higher from its 100-day moving average. The near-term trend is bullish and the pair shows signs that it might extend higher in the recovery after the jobs report.

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The markets are expected to pick up later today as US traders return to their desks after a holiday on Monday. Early day volatility is seen in oil prices and the global equity markets which have fallen under pressure after Apple released a warning that it will miss on earnings.

Technical Analysis

GBP/USD is set to post a bullish reversal candle on a 4-hour chart which could be signaling that a near-term bottom is in place for GBP/USD after the decline yesterday.

<a href="https://www.tradingview.com/symbols/GBPUSD/?exchange=FX" rel="nofollow noopener" target="_blank" data-ylk="slk:GBPUSD 4-Hour Chart;elm:context_link;itc:0;sec:content-canvas" class="link ">GBPUSD 4-Hour Chart</a>

The positive jobs report should put rate cut expectations at bay which will also tend to underpin Sterling.

Last week, a horizontal level at 1.3050 and the 50-day moving average capped the upside in the exchange rate. The same area remains a near-term target if GBP/USD can extend on the early day momentum.

In the event the pair turns lower, support is found at 1.2962.

Bottom Line

  • After a brief move lower, GBP/USD is showing renewed upside momentum as the UK jobs report showed the employment rate rising to a fresh record high.

  • The markets are expected to pick up later in the day as US traders return after a holiday on Monday.

This article was originally posted on FX Empire

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