The GBP/USD pair fell by 0.07% during the North American session, influenced by strong US economic data that boosted the Dollar. The pair was trading at 1.3408. Even with a higher unemployment rate in the UK, the Pound rose against most currencies except for the US Dollar. A mixed UK job report showed more jobs but also rising unemployment.

Asian Session Trading

During the Asian session, GBP/USD dropped below 1.3400, hovering around 1.3390. Traders were waiting for the UK jobs report, which includes data on June’s Claimant Count Change and the unemployment rate for the three months ending in May. The instruments mentioned on this page are for informational purposes only and should not be seen as buying or selling recommendations. It’s essential to conduct thorough personal research before making investment decisions. Trading involves risks, including the complete loss of your initial investment. Please note that we cannot ensure the accuracy, timeliness, or completeness of the information provided. We advise consulting an independent financial advisor if you have concerns about the risks of foreign exchange trading.

Risk Considerations

Trading foreign exchange carries significant risks, including the chance of losing all or part of your initial investment, and it may not be suitable for everyone. The pair is struggling below the 1.3400 mark mainly due to the strength of the Dollar. Recent US data, particularly the Non-Farm Payrolls report that showed over 270,000 jobs added, surpassed expectations and supports the idea of a strong American economy. This makes us hesitant to take a simple long position on the Pound at this time. The UK jobs report adds complexity that derivative traders can use to their benefit. With UK inflation at 4.0% in January 2024—twice the Bank of England’s target—any indication of weakness in the labor market could challenge the central bank’s ability to keep interest rates high. We believe this tension will result in price volatility. Given the breach of an important psychological level, buying put options seems like a smart way to prepare for further declines. Historically, breaking below such a key level has often led to testing the next significant support zone, which may be around 1.3250. This approach allows for defined-risk speculation on continued Sterling weakness. For those expecting a significant price movement but unsure of the direction, we are considering long straddle positions. These should be set up ahead of major data releases, like the upcoming UK inflation report or the next central bank meeting. This strategy allows traders to benefit from a substantial price change in either direction, leveraging the uncertainty itself. Create your live VT Markets account and start trading now.

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