GBP/USD bulls poke 1.1700 on Brexit optimism, softer UK Unemployment Rate, US inflation eyed
- GBP/USD defends two-day upside momentum at a fortnight top.
- UK Claimant Count Change increased in August but ILO Unemployment Rate dropped for three months to July.
- EU’s Sefcovic steps forward to ease Brexit woes surrounding NI border.
- US CPI will be a crucial catalyst ahead of UK inflation.
GBP/USD picks up bids to 1.1700 as the Cable pair buyers cheer upbeat UK jobs report during early Tuesday. Even so, cautious sentiment ahead of the US inflation data seems to restrict immediate upside moves.
The UK’s headline Claimant Count Change rose to 6.3K in August compared to the market consensus of -9.2K and -10.5K prior. Further details suggest that the ILO Unemployment Rate for three months to July dropped to 3.6% versus 3.8% market forecasts.
Also read: UK ILO Unemployment Rate unexpectedly drops to 3.6% in July
In addition to the mostly positive UK job data, the price positive headlines surrounding Brexit also should have favored the GBP/USD prices. That said, the European Union’s (EU) Brexit Chief Maros Sefcovic has said, per the Independent, that he wants to reduce physical customs checks across the Irish Sea to just a few lorries a day in a bid to break the impasse over the Northern Ireland Protocol (NIP).
Also positive could be the likely aggression of the Bank of England (BOE) due to Liz Truss’ elections as the UK Prime Minister (PM), as well as hopes of more stimulus from the British government to defend the economy from the recession woes.
On the other hand, cautious optimism surrounding the US inflation release and expectations of more monetary/fiscal support from China seem to have favored the market’s sentiment and the GBP/USD prices. On the same line could be the updates that Ukraine is gaining success in pushing back the Russian military from some of its areas that seem to have underpinned the market’s cautious optimism, even as the same raised the fears of Russia’s harsh retaliation.
However, the geopolitical tension concerning China and Russia, as well as the likely tough road for UK PM Truss challenges the GBP/USD bulls.
Having witnessed an initial reaction to the UK jobs report, GBP/USD traders may witness the lackluster trading hours ahead of the US Consumer Price Index (CPI) data for August. Market forecasts suggest that the CPI is expected to ease to -0.1% MoM versus 0.0% prior, which in turn could help the Cable pair buyers to keep reins.
Technical analysis
Successful trading beyond the 1.1650-55 support, including the 100-SMA and a one-week-old ascending trend line, joins the bullish MACD signals to favor the bullish bias surrounding the GBP/USD. With this, the Cable pair remains on the way to a horizontal area comprising multiple levels marked since August 22, between 1.1745 and 1.1755.