In the last decade of November, the GBPUSD currency pair entered the technical overbought zone on the daily timeframe. The chart signals that there might be a correction to the level of 1.235–1.243.
Let's see what сan trigger the downward movement of the GBPUSD pair.
If we consider the denominator of the pair — the U.S. dollar, then the most important economic events this week that can cause high volatility of the U.S. currency would be, of course, the reports on the U.S. labor market.
Moreover, the first preliminary estimates — The Job Openings and Labor Turnover Survey (JOLTS) in the United States — will be published on Tuesday. Then, on Wednesday, the U.S. ADP Nonfarm Employment Change report will be published.
Friday's Nonfarm payrolls in conjunction with the U.S. unemployment rate will be the final chord. One should keep in mind that any hints that the labor market is "cooling down" insufficiently, may cause a relapse of actions aimed at strengthening the U.S. currency. In addition, in the current situation, the average hourly wage indicator will also be important. Its increase in the future can provide conditions for the growth of consumer demand, and accordingly — for the growth of inflation.
As for the British currency, its downward trigger could be the expected on Wednesday report of the Bank of England on financial stability, the minutes of the bank's meeting and the speech of the head of the Bank of England Bailey. If the above releases hint to the soft policy, it will turn GBPUSD downwards.
One should also keep in mind that today there is still an interest rate differential in favor of the US dollar — 5.5%(FED)/ 5.25%(BOE). Thus, for carry trade the GBPUSD downside movement is a priority.
The final recommendation is to sell GBPUSD.
The profit could be fixed at 1.24. Loss — at 1.29.
This content is for informational purposes only and is not intended to be investing advice.
