- The data showed a higher-than-expected number of jobless claims in the UK.
- Average weekly earnings in the UK minus bonuses rose by 5.7%.
- The pound is up about 2.1% in 2024 against the dollar.
The GBP/USD outlook is slightly bearish as the pound pulls back from recent highs following poor employment data. However, the bullish trend could continue as the dollar is weak amid increasing Fed rate cut expectations.
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Data on Thursday showed a higher-than-expected number of UK jobless claims in the previous month. The number of claimants was 32,300, compared to estimates of 23,400. Still, this is down from the last reading of 51,900. If unemployment is higher than estimated, the economy is worse than expected. This could put pressure on the Bank of England to start reducing borrowing costs.
However, separate employment data revealed that average weekly earnings net of bonuses rose by 5.7%, meeting forecasts. Moreover, data from the previous session showed that services inflation remained high at 5.7%. Therefore, market participants have reduced the odds that the BoE will cut rates in August from 50% to 40%.
Unlike other major currencies, the pound has remained resilient against the dollar this year. So far, it has gained about 2.1% in 2024 against the dollar. The recent rally was driven by heightened expectations for a Fed rate cut. US inflation has maintained its downward trend, giving policymakers more confidence that they will hit the target. As a result, investors are placing a 100% probability of a rate cut in September. This put pressure on the dollar, allowing the pound to rise. Retail sales data tomorrow could shed more light on the UK economy.
GBP/USD key events today
GBP/USD Technical Outlook: Price pulls back to 30-SMA after bearish RSI divergence
On the technical side, the GBP/USD price is in a bullish trend that recently made a new high. However, the price is currently pulling back and approaching the 30-SMA support. The bulls made a solid attempt to push the price above the key level of 1.3002.
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However, as the price rose, the RSI turned lower, indicating weakness. Accordingly, the price again fell below the key level. If the bears are stronger, they could take a break below the 30-SMA. However, if the SMA holds firm, the bulls could retest the 1.3002 level and break above to make a higher high.
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