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May 17 - 01:55 PM

GBP/USD - COMMENT-UK Jobs Data Could Blaze Higher Trail For Sterling

By Paul Spirgel  —  May 17 - 10:10 AM

GBP/USD surged higher on Tuesday after data showing UK unemployment hit a 48-year low nL5N2X91BH, and its rise above the 10-day moving average at 1.2347 could unlock further gains if cable can overcome resistance that stopped it below 1.25.

A close above the 10-DMA would facilitate a test of 21-DMA resistance by 1.2522 and help pause a slide exacerbated by the BoE's dovish shift in March.

GBP bulls received surprising help from UK-U.S.
rate differentials, which started narrowing as markets tempered Fed rate-hike expectations in H2 2022 as recession risks emerge.
Eikon FEDWATCH shows a flatter slope of rate hikes in 2022.

The UK employment beat lifted UK rates, as UK 3-month Sonia futures losses out-stripped Eurodollars and gilt-Treasury spreads moved in sterling's favor.

Above the 21-DMA, a close above 1.2652, the 50% Fib of 1.3147-1.2156, would shift momentum to GBP bulls, putting the 30-DMA at 1.2692 and the 55-DMA at 1.2901 in sharper focus.

For more click on FXBUZ

GBP Chart: Click here

US-Global rate spreads: Click here

Refinitiv IFR Research/Market Commentary


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