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An event to watch out for today:
09:00 EET. GBP – Unemployment Rate
GBPUSD:
GBP/USD broke a five-day winning streak, trading near 1.2600 during Tuesday’s Asian session. Traders are awaiting UK employment data to be released later in the day. Jobless claims for January are expected to rise to 10,000 from the previous reading of 0.7,000. The ILO unemployment rate is also expected to rise to 4.5% from 4.4%.
British Prime Minister Keir Starmer said on Monday that any peace deal for Ukraine would require “U.S. support” to prevent Russia from attacking again, Reuters reported. Starmer emphasized that the future of Ukraine is the most important issue for Europe and Europe needs to share responsibility for resolving the situation.
Downside risk for the GBP/USD pair may be related to the strengthening of the US dollar amid rising Treasury yields. The US Dollar Index (DXY), which tracks the dollar against six major currencies, is rising after losing ground in the previous three sessions and is trading around 106.90. Meanwhile, yields on 2-year and 10-year U.S. Treasuries are at 4.27% and 4.51%, respectively.
Federal Reserve Chairwoman Michelle Bowman noted Monday that rising asset prices may have slowed the Fed’s progress on inflation. While she expects inflation to fall, she cautioned that upside risks remain and emphasized the need for more certainty before considering a rate cut.
Meanwhile, Fed chief Christopher Waller acknowledged Monday that while inflation has improved, progress has been “painfully” slow. Waller emphasized the importance of policy uncertainty not getting in the way of data-driven decision-making.
Trading recommendation: SELL 1.2600, SL 1.2660, TP 1.2465
Origin: FreshForex
