The GBP/USD exchange rate fell below 1.3600 after a report revealed that US Initial Jobless Claims dropped to 227,000. This was down from 233,000 and lower than the predicted 235,000. This data suggests a strong US job market, making a Federal Reserve rate cut less likely at the upcoming July meeting. As of the report, GBP/USD was trading at 1.3550. The Pound Sterling lost over 0.65% in a week with limited economic data from the UK. Traders are now waiting for important figures like the UK’s Gross Domestic Product and industrial output.

US Economic Indicators

US Continuing Claims rose to 1.97 million, the highest it has been in three and a half years. Meanwhile, Fed officials have expressed concerns about inflation due to tariffs and a weaker US dollar. Upcoming events will include speeches from Federal Reserve officials and the release of UK economic statistics. Technically, GBP/USD is on an upward trend but faces resistance at the 20-day simple moving average (SMA) at 1.3592. If it recovers above 1.3600, it might reach this week’s high of 1.3657. However, the current trend suggests weakening momentum, with the RSI indicating potential downward movement. The earlier drop below 1.3600 in GBP/USD was driven by stronger than expected US jobless claims data. The decline in initial claims to 227,000, which is below both the forecast and previous reading, boosts confidence in the US job market. While it doesn’t guarantee that the Federal Reserve will keep interest rates steady, it reduces the chances of any cuts in the near term, especially at the July meeting. The Fed continues to stress that their decisions rely on data, and this report supports those advocating for caution before making any cuts. Although the pound fell to 1.3550, it wasn’t in a vacuum. Limited UK data didn’t encourage buyers, allowing the dollar to strengthen broadly. Over the week, the pound dropped 0.65%, making it one of the weaker currencies against major counterparts.

Market Analysis And Outlook

It’s notable that US continuing claims hit 1.97 million, the highest since late 2020. This increase, even with a fall in initial claims, suggests some workers are taking longer to find new jobs. While it implies some softness in specific job sectors, it doesn’t shift the overall positive outlook for the labor market based on the initial claims data. Fed officials are consistently cautious about inflation risks. Many of these concerns stem from external factors like tariffs and a declining dollar, which can raise import prices. This suggests that price pressures may persist, keeping the Fed hesitant to change policies too quickly. Looking forward, we have several key events to watch, including the upcoming UK GDP and industrial production figures. These will provide new insights into the UK economy and could indicate consolidation or decline. Currency traders should be ready for possible exaggerated market reactions to weak data due to low liquidity, particularly if market sentiment is already negative. Current market dynamics do not favor the pound, so even small disappointments could lead to significant selling. From a technical viewpoint, GBP/USD remains above broader trendlines but is hitting resistance at the 20-day SMA around 1.3592. This level is crucial for immediate trading. A sustained break above could pave the way to 1.3657, but the difficulty of holding above 1.3600 indicates caution against aggressive long positions. The recent consolidation should not be seen as mere stability; the Relative Strength Index (RSI) suggests fading buying strength and possible short-term declines. Traders should focus on where momentum shows weakness instead of trying to catch market tops and bottoms. Until new data refreshes market interest, pricing will likely react more to international trends rather than domestic events. Those actively trading this market need to adjust their positions closely around key levels rather than on narratives. Create your live VT Markets account and start trading now.

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