GBP price, news and analysis:
- GBP/USD continues to recoup some of its losses of late last week, although it has edged back from its highs.
- UK labor market data showed a larger than expected increase in the claimant count measure of unemployment last month.
- Looking ahead, inflation data Wednesday and the Bank of England’s monetary policy decision Thursday will likely determine whether the GBP/USD rally persists.
GBP/USD rally persists
GBP/USD is extending Monday’s rally in early European trading Tuesday, continuing to claw back some of its losses from late last week. That suggests sentiment towards GBP is improving despite a mixed bag of UK labor market data.
The numbers showed that the claimant count measure of unemployment rose by 528,900 in May, above expectations of a 400,000 increase. The number of people on UK company payrolls fell by more than 600,000 in April and May combined, and vacancies fell by the most on record. However, the April unemployment rate was steady at 3.9% rather than rising to 4.7% as predicted.
GBP/USD Price Chart, 30-Minute Timeframe (June 10-16, 2020)
Chart by IG
| Change in | Longs | Shorts | OI |
| Daily | -5% | 4% | -2% |
| Weekly | -8% | -5% | -7% |
Looking ahead, GBP/USD will likely persist in moving higher as long as risk appetite continues to be boosted by the prospect of continuing stimulus of the US economy by the Federal Reserve and the US government; outweighing fears of a second wave of Covid-19 infections.
Next up in UK data will be inflation numbers for May, due Wednesday. Inflation is forecast to have fallen to 0.5% year/year, down from 0.8%. Then attention will turn to the latest decisions on monetary policy by the Bank of England, due Thursday. It is expected to have raised its buying of UK government bonds in June but to have left all its other settings where they were.
Like to know how to read a forex economic calendar? Check out this article.
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--- Written by Martin Essex, Analyst and Editor
Feel free to contact me via the comments section below
