U.S. Markets close in 1 hr 14 mins

GBP/USD Forecast: At Risk Of Extending Its Slump After Piercing 1.3100

Valeria Bednarik - Chief Analyst at FXStreet

GBP/USD Current Price: 1.3121

  • UK PM Johnson plans to prevent an extension of the Brexit’s transition period.
  • UK employment data mixed, wages’ growth above expected.
  • GBP/USD at risk of extending its slump after piercing 1.3100.

The GBP/USD pair plummeted this Tuesday, touching a low of 1.3098 and finishing the day a handful of pips above the 1.3100 figure. The collapse came after Downing Street announced plans to write into law that the UK will leave the EU in 2020 without allowing an extension of the transition period. The news revived concerns about a possible hard landing.

The UK released an update in employment data, which came in mixed, as the number of people claiming jobless benefits rose by 28.8K in November, against 25.4K previously, revised from 33K. The ILO unemployment rate for the 3-month to October resulted at 3.8% matching the previous reading but below expected. Finally, average weekly earnings excluding bonuses arrived at 3.5% 3Mo YoY, while the gauge, including bonus, came in at 3.5% 3Mo YoY, both slightly better than anticipated.

This Wednesday, the UK will publish November inflation figures. Monthly CPI is foreseen up by 0.2% after falling by 0.2% in October. However, yearly inflation is expected to come at 1.4%, slightly below the previous 1.5%. Core annual CPI is seen unchanged from its previous reading at 1.7%.

GBP/USD Short-Term Technical Outlook

The GBP/USD pair has turned bearish after losing the 1.3300 threshold, retaining the negative stance, after plummeting below pre-election levels. In the 4-hour chart, the pair has fallen below a now bearish 20 SMA, barely holding above the 100 SMA. Technical indicators have stalled their slides near oversold readings, falling short of indicating bearish exhaustion. Chances of a bearish extension will decrease if the pair recovers beyond 1.3175, the immediate resistance.

Image by Karen Arnold from Pixabay

0

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.