After most of the data for the week, GBP/USD advancing

Earlier this week, in the Currency Pair of the Week, we discussed how most of the movement for the GBP/USD would be data dependent. On Tuesday, the UK released the Claimant Count Change for April at -56,900 vs -42,500 expected and a revised March print to -81,600. The Unemployment Rate for March fell to 3.7% vs 3.8% expected and 3.8% in February. This is the lowest reading since 1974! Average Earnings Including bonuses for March rose to 7% vs and expectation of only 5.4% and a February reading of 5.6%. As a result, the labor picture is looking solid and should be a positive for GBP/USD.

In addition, the UK also released CPI data for April on Tuesday. The headline print was 9% YoY vs 9.1% YoY expected and 7% YoY in March. This is the highest reading since 1982! In addition, the Core CPI was 6.2% YoY vs 6.2% YoY expected and 5.7% YoY in March. This was the highest level for the Core CPI on record! The inflation picture paints a strong case for an increasing GBP/USD.

Still yet to come from the UK on Friday is Retail Sales, where both the headline and the ex-Fuel numbers are expected to improve to -0.2% MoM was previous readings of -1.4% MoM and -1.1% MoM respectively.

In the US, the big news that caused stock market indices to sell off was not necessarily the Retail Sales data for April that was released, but rather the release of big retailer earnings from companies such as Walmart and Target. The companies not only missed earnings, but also guided lower. One may expect that the US would jump significantly on the news, however it remained subdued as USD/JPY and USD/CHF sold off aggressively as funds flowed into “safety” currencies.

As for GBP/USD, on the 240-minute timeframe, the pair moved higher into today, breaking out of the descending wedge the pair has been in since early May. The target for the breakout of a descending wedge is a 100% retracement, or 1.2638. This level also confluences with the 50% retracement from the highs of April 21^st to the lows of May 13^th, near 1.2622.

Source: Tradingview, Stone X

Currently, GBP/USD has broken above a flag pattern that price has formed while on its way to the descending wedge target. The target for the flag pattern is the length of the flagpole added to the breakout point of the flag, or near 1.2760. This also confluences with the 61.8% Fibonacci retracement level from the above-mentioned timeframe. However, if GBP/USD is to reach either target, price must first get above the 38.2% Fibonacci retracement level at 1.2512. If the pair fails to move higher, first support is at the May 18^th lows of 1.2330. Below there, price can fall back to the lows of April 21^st at 1.2156.

GBP/USD has been moving higher this week as a result of the strong labor market in the UK and the high inflation readings. Can the pair continue to move higher towards the descending wedge and flag formation targets? It may depend on the overcome of tomorrows Retail Sales data!

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.