GBP/USD Rebounds Ahead of July Low with UK Employment, CPI on Tap

British Pound Outlook: GBP/USD

GBP/USD appears to be bouncing back ahead of the July low (1.2616) as it extends the rebound from the monthly low (1.2665).

GBP/USD Rebounds Ahead of July Low with UK Employment, CPI on Tap

GBP/USD may attempt to retrace the decline following the Bank of England (BoE) rate-cut as it initiates a series of higher highs and lows, but data prints coming out of the UK may sway the exchange as the Monetary Policy Committee (MPC) starts to alter the path for monetary policy.

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UK Economic Calendar

FOREX.com Economic Calendar

The update to the UK Employment report is anticipated to show the jobless rate widening to 4.5% in June from 4.4% the month prior, while claims for unemployment benefits are projected to increase 14.5K in July.

In addition, the UK Consumer Price Index (CPI) is anticipated to reflect a mixed picture for inflation as the headline reading is expected to increase to 2.3% from 2.0% per annum in June, while the core rate is seen narrowing to 3.4% from 3.5% during the same period.

Signs of a weakening labor market along with evidence of easing price growth may drag on the British Pound as it puts pressure on the BoE to further unwind its restrictive policy, but a batch of positive data prints may fuel the recent rebound in GBP/USD as it raises the central bank’s scope to further combat inflation.

With that said, GBP/USD may continue to retrace the decline from earlier this month as it initiates a series of higher highs and lows, but the recent rebound in the exchange rate may end up short-lived if it fails to hold above the July low (1.2616).

GBP/USD Price Chart –Daily

Chart Prepared by David Song, Strategist; GBP/USD on TradingView

• GBP/USD initiates a series of higher highs and lows following the failed attempt to test the July low (1.2616), with a move back above the 1.2760 (61.8% Fibonacci retracement) to 1.2830 (23.6% Fibonacci retracement) zone raising the scope for a push towards the monthly high (1.2863).
• A break/close above the .2900 (23.6% Fibonacci retracement) to 1.2910 (50% Fibonacci extension) region to bring 1.3010 (61.8% Fibonacci extension) back on the radar, but lack of momentum to hold above 1.2710 (23.6% Fibonacci extension) may lead to another run at 1.2630 (38.2% Fibonacci retracement).
• Failure to hold above the July low (1.2616) opens up 1.2470 (50% Fibonacci retracement), with the next area of interest coming in around the May low (1.2446).

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--- Written by David Song, Strategist

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