Last week, the GBPUSD pair attempted to rebound from the two-month low of 1.255. The price almost reached 1.275 before the bears seized the initiative and neutralized most of the quotations' growth. On Monday, there was another attempt to develop the upward movement of GBPUSD, but the outcome may be the same.
The U.S. labor market statistics for August, released on Friday, were mixed. Unemployment level increased more than expected (3.8% vs. 3.5%), while the number of new jobs decreased below 200 000 for the 3rd month in a row. At first glance, such figures shouldn’t have caused a significant strengthening of the dollar, but this was the result of last week's trading on the currency market.
It seems that even considering the weakening of the U.S. labor market, traders still consider the American currency a more reliable asset compared to the pound. The data on business activity in the British manufacturing sector also contributed to this opinion. The final result of 43 points looks satisfactory compared to the preliminary estimate (42.5). However, it would be the minimum since May 2020 in any case. Moreover, several PMI indicators are below the key mark of 50 points for more than a year.
Huw Pill, Chief Economist of the Bank of England, tried to help the pound a little. He confirmed the British regulator's intention to continue the interest rate hike cycle until core inflation heads towards the 2% target. However, these statements didn’t affect the pound exchange rate. Investors become more concerned about the negative influence of high rates on the UK economy.
The nearest target for pound sellers and dollar buyers is the level of 1.255. There is no oversold condition on technical indicators. There are no significant obstacles for the GBPUSD quotes to decline from this point of view
The following trading strategy might be suggested:
Sell GBPUSD at the current price. Take profit — 1.255. Stop-loss — 1.275.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.
