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GBPUSD Pending Publication of the US Labor Market Report

12/2/2022 11:05 AM

The British pound is trading with multidirectional dynamics, retreating slightly from the local highs of June 27, updated the day before. The GBP/USD pair is testing 1.2240 for a breakout, but market activity remains subdued as market participants are in no hurry to open new positions ahead of the weekend.

Today, investors are waiting for the publication of the final report on the US labor market for November. Current forecasts suggest that the number of Nonfarm Payrolls will decrease from 261.0 thousand to 200.0 thousand in November. Moreover, given the earlier report from Automatic Data Processing (ADP) on employment in the private sector (127.0 thousand against the expected 200.0 thousand), it is likely that the real dynamics will be even worse. At the same time, analysts expect a slight slowdown in the growth rate of Average Hourly Earnings from 0.4% to 0.3%.

In turn, the pound is slightly supported by relatively optimistic macroeconomic publications from the UK, despite the risks of a recession for the economy. In particular, the S&P Global/CIPS Manufacturing PMI in November showed an increase from 46.2 points to 46.5 points with neutral forecasts.

Against the backdrop of rapidly developing inflation, the United Kingdom may soon be covered by mass unrest. According to The Telegraph sources, representatives of leading social sectors have already declared their desire to defend the rights in the issue of wage increases: civil servants, workers in the border services and the automotive industry, which could lead to disruptions in the work of state institutions. It is worth noting that Brexit led to an overall increase in the cost of living for the poorest households by 1.1%, which is 52.0% more than the 0.7% increase in the wealthiest 10.0% of UK households.

Bollinger Bands in D1 chart show active growth. The price range is widening but does not conform to the development of the "bullish" trend in the ultra-short term again. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its highs, indicating the risks of overbought pound in the ultra-short term.

Resistance levels: 1.2311, 1.2400, 1.2500, 1.2600. | Support levels: 1.2152, 1.2027, 1.1939, 1.1853.

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