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GBP/USD still has Higher Potential

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GBP/USD still has Higher Potential

The British pound was well supported today, testing yearly highs amid stronger than forecast labour market data. As the shortened week draws to a close, the forex market is eying a higher upside for the GBPUSD pair, which is still deciding whether to breakout toward 1.70.

UK jobless claims declined 30,400 in March, after falling at a revised pace of 37,000 the previous month, the Office for National Statistics reported today. A broad consensus of market analysts said jobless claims would decline 30,000. The ILO unemployment rate unexpectedly fell 0.2 percentage points to 6.9 percent between December and February.

Average earnings, meanwhile, continued to rise at a steady pace. Earnings including bonuses were up 1.7 percent, while earnings excluding bonuses edged up 1.4 percent. Both figures were higher than the previous month but lower than forecasts.

The GBPUSD soared to a session high of 1.6818. In North America’s mid-day session, the pair was trading at 1.68, up 70 pips. The real question is whether the pair can gain enough traction to push for 1.70. Sterling has experienced four lower highs since December; a failure to reach 1.70 suggests the bull market is maturing.

The euro fell sharply versus its British rival. The EURUSD was trading at 0.8222, down more than 0.4 percent. The pair is on pace for a weekly decline of more than 0.6 percent. Eurozone data continued to disappoint the markets today. March inflation fell to the lowest level since 2009, the European Commission confirmed. Annual CPI fell from 0.7 percent to 0.5 percent, while core inflation dropped from 1 percent to 0.7 percent.

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