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Published this morning statistics on the state of the British labor market failed to support the pound. It continues to fall ahead of the Bank of England meeting on Thursday.
The unemployment rate rose to 3.8% (for the period from February to April), which turned out to be worse than the forecast of 3.6% and the previous value of 3.7%, according to the UK Office for National Statistics. The decrease in the number of unemployed in May amounted to -19.7 thousand, which is also worse than the forecast of -49.4 thousand.
The pound continues to decline throughout the currency market, and the GBP/USD pair updated its yesterday's low of 1.2106, moving steadily towards the 1.2000 mark (the lows of the GBP/USD decline wave that began in July 2014 near the mark of 1.7200).
Most likely, the pound will remain under pressure if no new positive news arrives from the UK.
The Bank of England has lowered its forecast for GDP growth in 2024 to 0.25% from 1%, and in 2023 the Bank of England now forecasts a contraction of GDP in 2023 by 0.25%, while before it was about 1.25% growth.
While markets are forecasting the key rate to rise to 2.5% by mid-2023, economists believe that the Monetary Policy Committee will be able to raise rates only once more this year, and this will probably happen in August. This is not a very positive factor for the pound, while the tightening cycle is accelerating in other major global central banks.
In an alternative scenario, from the current levels and near the support level of 1.2000, GBP/USD will again attempt a correction, especially if the dollar weakens following the Fed meeting starting today.
The first signal to open long positions will be a breakdown of the local resistance level 1.2165, and the confirming one will be a breakdown of the resistance level 1.2407 (EMA200 on the 1-hour chart).
Support levels: 1.2085, 1.2000
Resistance levels: 1.2165, 1.2200, 1.2300, 1.2330, 1.2407, 1.2536, 1.2600, 1.2645
Trading recommendations
Sell by market. Stop Loss 1.2220. Take-Profit 1.2000, 1.1950, 1.1900, 1.1800
Buy Stop 1.2220. Stop Loss 1.2085. Take-Profit 1.2300, 1.2330, 1.2407, 1.2536, 1.2600, 1.2645
