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  • The GBP/USD pair retreats from its weekly high and bears attack the intraday low of late.
  • Ireland’s Coveney admits the EU is willing to compromise on the NI protocol, but the Frost-EFOVI meeting is crucial.
  • A strong UK jobs report revives BOE rate hike hopes. However, bulls await a firmer CPI.

On Wednesday, the GBP/USD price will return to the Asian session after hitting a weekly high the day before. As a result, the cable pair remains at a pressure of about 1.3420 at the time of pressing.

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The latest UK employment data was supportive of the Bank of England (BOE)’s bullish outlook.

According to the UK’s National Statistics Office, the ILO’s unemployment rate has dropped from 4.5% in August to 4.3% in September. Compared to market expectations, this figure was slightly better than 4.4%. Furthermore, the response rate fell from 5.2% to 5.1% in October, and average earnings, including bonuses, rose 5.8% in September, exceeding analysts’ expectations of 5.6%. Based on the data, 67.5% of the probability of a rate hike of 20 points is probable at the Bank of England meeting on December 16.

UK Express reported: “Irish Foreign Minister Simon Coveney said the EU is ready to make drug proposals to combat the problems in Northern Ireland.” The news comes in the wake of British Brexit Minister David Frost’s threat to apply Article 16. According to the BBC, Taoiseach (Irish Prime Minister) Michel Martin believes the British negotiators want a solution.

According to the BBC, Taoiseach Leo Varadkar said he believes the political parties in Northern Ireland want to remain part of the single European market. Therefore, hard Brexit headlines keep fears of a hard Brexit in buyers’ heads and challenge GBP/USD buyers ahead of a meeting with EU Vice President Maros Sefcovic on Friday due to the UK freeze.

In contrast, after retail sales in the United States rose to an eight-month high in October, expectations of a Fed rate hike increased 1.7% m/m against the forecast of 1.4%. Again, the real estate market and industrial production contributed to the positive trend.

A number of prominent Fed members, including former US Treasury Secretary Lawrence Summers, former New York Fed President Bill Dudley, and St. Louis Fed President James Bullard, support the Fed’s actions. “Now, rate hikes won’t get rid of high inflation, reduce demand, or slow down the economic recovery,” said San Francisco Federal Reserve Bank President Mary Daly.

US Treasuries yielded 2.3 basis points (bp) higher at a three-week high, and the US dollar index (DXY) rose to its highest level in sixteen months. S&P 500 futures were also positive at the time of publication, but the stock was also up.

For an instant GBP/USD forecast, it will be important to monitor UK CPI and PPI data for October. Considering the positive expectations from the planned inflation data, the cable may rise again. However, Brexit headlines and the possibility of a Fed rate hike may hold the lead.

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GBP/USD price technical analysis: Negative outlook persists

gbp/usd price chart

The GBP/USD price looks slightly dipped below the 1.3400 mark but gained some traction and is now wobbling around the 20-period SMA on the 4-hour chart. However, the outlook is not quite encouraging, and the price may test the key level of 1.3330 ahead of 1.3300 as the Greenback is holding strong across the board. If the price maintains its stance above 1.3400, it is likely to revisit yesterday’s highs around 1.3470.

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