Market Overview

Sterling Stuck Near 1.2900 As UK Wage Growth Misses The Forecast

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  • The GBP/USD is trading little changed on the downside around 1.2910 as the UK unemployment remained at 4-decade low and wages rose less than estimated.
  • Seven members of UK parliament from the opposition Labor party left the party to form an independent group in protest of the party’s slow-motion against anti-Semitism and its support for Brexit.
  • The GBP/USD broke the downward sloping trend on the upside and Slow Stochastics made a bullish crossover in the Oversold territory with the losing steam with peaks around 1.2930.

The GBP/USD is trading little changed on the downside at around 1.2910 after the UK labor market saw the unemployment rate stuck to a four-decade low of 4.0% while wages rose 3.4% over the year in three months to December.

The UK Prime Minister Theresa May is scheduled to meet the Cabinet members while the UK Foreign Secretary Hunt is touring European capitals with Danish Copenhagen on the agenda today in an attempt to convince the EU leaders that the UK needs a new Brexit deal. 

On the UK domestic political scene, the news of seven Labor party rebels leaving the party broke out, with so-called independentists opposing party’s anti-Semitism and Brexit stance. The Labor party leader Jeremy Corbyn will be speaking at the conference of the UK manufacturers where he is expected to deliver an alternative and a “credible alternative plan” for Brexit that involves a permanent customs union with the EU and close ties with the EU’s single market.

While Sterling broke away from the downward sloping trend on Friday last week, the data lights and liquidity low Monday affected by the US President’s day holiday saw only marginal volatility with GBP/USD unable to make a breakout confirmation yet. 

Technically the GBP/USD broke away from the downward sloping trend that saw the currency pair fall as low as 1.2770 last week and it is stagnating above 1.2920 now. The break out on the upside was also confirmed by the bullish crossover of Slow Stochastics in the Oversold territory and then the reversal of the Relative Strength Index to the upside.

While 1.2877 representing a 100-day moving average (DMA) should as a support line in the near-term, the GBP/USD is likely to target 1.2970-1.3000. On the downside, the 100-DMA at 1.2877 is short-term support with the break below likely to see 1.2830 level tested that represents a 50-DMA.

GBP/USD daily chart

gbp_usd_daily-636861658341074335.png

 

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