The Pound-Dollar pair declined for the third consecutive day on Tuesday – which is also the fourth day of negative movement in the previous five – and fell to its lowest level since November 17 during the Asian session. Spot prices are currently trading around 1.2420 as traders now await new UK employment data for the month.
According to consensus estimates, the number of people claiming unemployment benefits is expected to rise to 17.2k from 16.8k previously, while the unemployment rate for the three months to March is expected to rise to 4% from 3.9%. This could serve as further evidence of a cooling labor market and strengthen bets for at least four rate cuts by the Bank of England (BoE) this year starting in June, which should put pressure on the British Pound (GBP) and lead to a decline in GBP/USD.
Meanwhile, the market’s immediate reaction to the unexpectedly strong report is likely to be limited amid strong bullish sentiment around the US Dollar (USD), bolstered by Federal Reserve (Fed) expectations. Investors have shifted their expectations for the Fed’s first interest rate cut to September since June following the release of better-than-expected US consumer inflation data. This keeps US Treasury bond yields high and provides support for the dollar.
Trading recommendation: Trade mainly with Sell orders from the current price level.
Origin: FreshForex
