The GBP/USD exchange rate exhibited stability within a narrow band following the release of the latest employment and inflation data from the United States, as well as the interest rate decision from the Bank of England. It was trading at 1.3376, slightly below this month’s peak of 1.3460. The GBP/USD exchange rate exhibited limited volatility following the release of the October and November employment figures by the United States. The report indicated a contraction in employment during October, attributed to a significant exit of government employees from the labor force. In November, the economy added 64,000 jobs, while the unemployment rate increased to 4.6% for the month.
Another report indicated that the headline Consumer Price Index experienced a significant decline in November, with the headline figure decreasing to 2.6% and the core figure adjusting to 2.7%. The data suggests that inflation could persist in its downward trajectory in the short term, given that crude oil prices have fallen below $60. The GBP/USD exchange rate exhibited limited volatility following the Bank of England’s decision to reduce interest rates by 0.25%, a move attributed to economic weakness alongside improving inflation metrics. In his statement, Governor Andrew Bailey forecasted that inflation will approach the 2% target by April. The bank indicated its intention to persist with gradual interest rate reductions, maintaining a trend that has been evident over recent months.
The pair is likely to experience volatility in the upcoming weeks, as a significant number of traders continue to operate in a holiday mindset. In the near term, attention will be focused on the forthcoming UK GDP report scheduled for release on Monday. The US GDP report is set to be released on Tuesday, coinciding with the Conference Board’s publication of the latest US consumer confidence report. The daily timeframe chart indicates that the GBP/USD exchange rate reached a high of 1.3460 on December 16 of this year, subsequently experiencing a pullback following significant macroeconomic events from the previous week.
It has consistently stayed above the 50-day and 100-day Exponential Moving Averages as well as the Supertrend indicator. The Relative Strength Index has shown a persistent upward trajectory and is approaching the threshold indicative of overbought conditions. Consequently, it is probable that the pair will stay within this range throughout the week. A breach of the significant resistance at 1.3460 will indicate further upward momentum, possibly reaching the psychological threshold of 1.3600. Conversely, a decline beneath the critical support threshold at 1.3300 would negate the optimistic perspective.