- US private employers hired fewer workers than expected in June.
- There was an unexpected increase in jobless claims from 234,000 to 238,000.
- The UK service sector contracted by a smaller margin than expected.
The GBP/USD forecast is pointing north, with the dollar weak after several poor economic reports in the previous session. Meanwhile, the pound strengthened on better-than-expected PMI data.
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The dollar had a tough time in the previous session as reports showed a slowing economy that could prompt the Fed to start cutting borrowing costs. The US released data that included private sector employment, service sector business activity and jobless claims.
US private employers hired fewer workers than expected in June. ADP employment changed to 150,000, down from 157,000 previously. Meanwhile, economists had expected an increase of 163,000 jobs.
Other jobs figures revealed an unexpected rise in jobless claims from 234,000 to 238,000 in the previous week. These reports pointed to a decline in demand in the labor market, which has remained resilient for most of this year. If this trend continues with Friday’s non-farm payrolls, the Fed will be under pressure to cut interest rates.
Furthermore, in June, the services sector shifted from expansion to contraction as business activity declined. The ISM Purchasing Managers’ Index fell from 53.8 to 48.8, indicating a sharp slowdown.
On the other hand, although activity in the UK service sector also fell, it was by a smaller margin than expected. The S&P Global services PMI fell from 52.9 to 52.1. Economists expected the index to fall to 51.2. Investors will now await the results of the parliamentary elections in Great Britain.
GBP/USD key events today
- parliamentary elections in Great Britain
GBP/USD Technical Forecast: Bulls take control after consolidation
On the technical side, the price of GBP/USD is in a bullish trend after the outbreak of the consolidation period. Earlier, the price traded in a large range with support at 1.2700 and resistance at 1.2850. However, the bears have gathered enough momentum to break below the support level.
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Unfortunately, the downtrend barely lasted as the price started to move again. At the same time, the RSI made a bullish divergence, showing that the bears hardly have the strength to continue lower. At this point, the bulls took control and broke above the resistance at 1.2700. The path is now clear for the price to revisit the resistance level at 1.2850.
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