The GBPUSD currency pair, after a small rebound on Monday, went down again in today's trading. The GBPUSD is aiming for another test of the 1.21 level, which may happen in the coming days. Both technical and fundamental factors speak in favor of the continuation of the GBPUSD downward movement.
Today in the UK the labor market statistics for September was partially published. The release of unemployment data and some other indicators was postponed to October 24 due to the problems with the collection and processing of the figures by the Britain's Office for National Statistics (ONS). At the same time, the data on the level of wages and the number of open vacancies have already been presented and managed to cause the weakening of the pound against other leading world currencies.
According to the results of the first month of the fall, the growth rate of wages in the UK slowed from 8.5% to 8.1%. The decline was more significant than analysts predicted (8.3%). ING economist James Smith noted that wage growth remains high, but this is unlikely to prompt the Bank of England to raise its key rate further at its November 2 meeting.
The Bank of England chief economist Huw Pill said the pace of nominal wage growth remained the only labor market indicator that doesn’t point to a strong slowdown in the economy. At the same time, the number of open vacancies fell to a 2-year low of 988,000. Since the beginning of 2023 this value has fallen by almost 250,000. The tension in the labor market of the UK is gradually easing. If the unemployment data that is delayed until next week reflects the decline in demand for labor, the pressure on the pound exchange rate will increase.
The Stochastic indicator continues to signal a high probability of further decline in GBPUSD. The nearest target of the bears remains the level of 1.21. Then the price could reach the lows of early October near the level of 1.204.
The following trading strategy can be suggested:
Sell GBPUSD at the current price. Take profit — 1.21. Stop loss — 1.224.
Traders can also use a Trailing stop instead of a fixed Stop loss at their discretion.