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  • In December, the US unemployment rate returned to a pre-pandemic low of 3.5%.
  • There was some weakness in the US labor market as wage growth slowed.
  • Investors will pay attention to US inflation data next.

The GBP/USD weekly forecast is bearish as the US labor market remains resilient, allowing the Fed to keep hiking interest rates.

Ups and downs of GBP/USD

The pound’s movement last week was mainly driven by PMI data from the UK and job reports from the United States.

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The labor market is still tight in the United States, with the steady job growth bringing the unemployment rate back to a pre-pandemic low of 3.5% in December. However, Federal Reserve officials may find some comfort in slowing wage growth.

However, the battle against inflation is still far from over for the US central bank.

Despite the Fed starting its fastest interest rate hike cycle since the 1980s last March, the labor market’s resilience is supporting the economy by keeping up consumer spending. But it increases the possibility that the Fed will boost its target interest rate above the 5.1% high it anticipated last month and maintain it there for some time.

Next week’s key events for GBP/USD

GBP/USD weekly forecast

Investors will pay attention to the US inflation report coming out next week. This will paint a picture of price increases in the country and the path that the Fed will likely take. The UK will release GDP data that will show the state of the economy.

GBP/USD weekly technical forecast: Bears weakened at the 1.1904 support

GBP/USD weekly forecast

The daily chart shows GBP/USD has broken below the bullish trendline and is trading below the 22-SMA. The break below the trendline showed that bears were ready to take charge. Bears first showed strength when the price made a strong bearish candle at the 1.2423 resistance level.

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The price then broke below the 22-SMA and the bullish trendline. However, the move after the break was weak, and it paused at the 1.1904 support level. This is where bulls returned with a strong candle. The bullish trend will resume if bulls break above the 22-SMA, and the price will likely retest the 1.2423 resistance.

However, if bears can gather the strength to push off the 22-SMA, we might see a break below the 1.1904 support with the next target at the 1.1506 support.

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