GBP/USD has been quite volatile and indecisive recently while residing between the corrective range of 1.2850-1.3050 area. Despite downbeat economic results recently, GBP gained good momentum over USD which is expected to fade away quite soon. USD is likely to regains its momentum in the coming days.
Recently the UK Average Earning Index report was published with an increase to 3.0% as expected from the previous value of 2.8%, Unemployment Rate increased to 4.1% which was expected to be unchanged at 4.0%, and Claimant Count Change declined to 20.2k from the previous figure of 23.2k which is quite good, but it failed to meet expectationa for a notable decrease of 4.3k. The gain on the pound sterling is currently assumed on the back of the positive Brexit impact which does not guarantee a long-term steady growth, but it provides certain momentum for the time being. Today the UK is due to present a CPI report today which is expected to increase to 2.5% from the previous value of 2.4% and RPI could have increased to 3.4% from the previous value of 3.3% may lead to certain volatility.
On the other hand, USD has been struggling to sustain the momentum against GBP. Traders are betting on another rate hike in December. On the other hand, the US has not released positive macroeconomic report to support USD gains. The Federal Reserve signaled its readiness for the nearest monetary tightening which is likely to affect the future economic growth of the country. Though the Employment reports were quite positive, the US Budget report for October showed a deficit of $100.5 billion which made a negative impact on the currency, leading to certain weakness. Though USD is currently making a pullback, there are still certain reasons for USD to regain its momentum in the future which include the nearest rate hike, Equity Market Pressure, and Trade Policy. Moreover, upbeat economic data will also be an inevitable tool for the currency to regain its momentum in the coming days.
Meanwhile, upcoming economic reports from the UK could provide GBP with support. However, soft economic reports recently may leave certain traces of weakness along the way. Though USD is currently struggling to maintain momentum, upcoming events and reports may lead to certain gains in the process. To sum up, GBP gains are expected to be short-lived, whereas USD has more reasons to regain its momentum and continue with the bearish trend in the pair.
Now let us look at the technical view. The price is currently quite indecisive after rejecting off the 1.3050 area with a daily candle today which might lead to more corrections and volatility. Though the price pushed higher yesterday with an impulsive momentum, rejection off the 1.3000-50 area indicates the presence of bears in the market which might encourage further bearish momentum. As the price remains below 1.3050 with a daily close, the bearish bias is expected to continue.
SUPPORT: 1.2850, 1.2920
RESISTANCE: 1.3000-50, 1.3200
BIAS: BEARISH
MOMENTUM: VOLATILE
