The GBPUSD pair rebounded from the local lows of early April, but failed to return to the March range of 1.28–1.29. Bulls are trying to buy out deep drawdowns of the pound against the dollar, but there is no trigger for a stable upward movement of quotes. The current wave of growth finds strong resistance near the level of 1.27, from which there could be a reversal to the low of last week at 1.255.
Yesterday, the British currency came under pressure. The results of the March survey by the Recruitment and Employment Confederation (REC) reflected the slowest growth in permanent workers' wages since July 2020. REC chief executive Neil Carberry said the pace of pay increases in Britain was already below the long-term average. He said the Bank of England should react to this data and start easing monetary policy.
Analysts at Monex Europe don’t expect the British regulator to reduce the key rate at the next meeting on May 9. The probability of such a step is only 25%, but this doesn’t mean the regulator will stick to tight monetary policy. According to analysts, Andrew Bailey and his colleagues will pay attention to five consecutive declines in demand in the labor market, as well as comment on the growing number of layoffs. As a result, the chances of a June monetary policy easing will increase.
The data on retail sales from the British Retail Consortium was published on Monday. March retail sales were 3.2% higher than the figures of the same month in 2023, but there is a misrepresentation of the statistics. An early Easter in 2024 boosted household purchasing activity last month, but seasonally adjusted consumer spending grew at its lowest rate in a year and a half. This is a negative sign for the pound.
On the daily chart of GBPUSD, the Stochastic indicator will soon give a sell signal, confirming the high probability of price decline. The targets of the downward movement will be the levels of 1.26 and 1.255.
The following trading strategy can be suggested:
Sell GBPUSD at the current price. Take profit 1 — 1.26. Take profit 2 — 1.255. Stop loss — 1.27.
Traders can also use a Trailing stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
