British Pound Rallies as Improving Labor Market Reduces Need for Easing
- Best UK jobs change (+250K vs +165K expecte) since July 2010 (+282K).
- BoE warns continued strength in Pound could future growth prospects.
- All eyes turn to FOMC at 19:00 GMT.
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Intraday Price Perspective
A scan of this morning’s best and worst performers via the Strong/Weak app shows that the British Pound has easily outperformed its major counteparts, mainly due to the strength in incoming labor data this morning (see below). The 3M Unemployment Rate unexpectedly to 7.4% amid jobs growth of +250K, easily outpacing expectations of both the market and forecasts set forth by the Bank of England.
Considering that today is a FOMC day, volatility is likely to spike higher in several hours on information that could offer materially change the short-term trading horizon. Accordingly, as we see that GBPNZD is a top performer across the four timeframes covered, we will use this opportunity to rexamine the long strategy set forth originally on Monday:
TECHNICAL ANALYSIS – CHART OF THE DAY
GBPNZD H4 Chart: October 11 to Present
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- Going back to May 30, the GBPNZD has traded in a range between 1.8860 and 2.0060 (with a brief break higher for three days from November 28 to December 1).
- The Symmetrical Triangle (black lines) that led to a break higher in mid-November has given way to another Symmetrical Triangle since November 29 (red lines).
- The recent Symmetrical Triangle (red lines) appears to be breaking to the upside today.
- Price has climbed above its short-term EMA envelope on m15, H1, and H4.
- RSI (21) on the H4 timeframe, after consolidating alongside price, is starting to break higher.
- A move in price into the 1.9925/2.0060 zone, confirmed by RSI (21) climbing above 55, would suggest a break higher could be coming.
- First target on a break higher is 2.0285. Bullish bias invalidated at 1.9500.
Here’s the other data influencing and that will influence European FX price action today:
EURO-ZONE ECONOMIC CALENDAR
UK ECONOMIC CALENDAR
SWISS ECONOMIC CALENDAR
--- Written by Christopher Vecchio, Currency Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.