Two trades to watch: GBP/USD, FTSE

Fiona Cincotta
By : ,  Market Analyst

GBP/USD rises after upbeat jobs data

The Pound trades higher after encouraging UK jobs data, recovering from a 1.30 low yesterday. The unemployment rate ticked lower to 3.9% in the 3-months to January, down from 4.1% and ahead of forecasts of 4%. Unemployment is now below its pre-pandemic level highlighting tightness in the labour market.

The claimant count dropped by a further 48,1k in February, after falling 31k in January. Average earnings, including bonuses, rose 4.8% YoY, boosting inflationary pressures and mounting pressure on the BoE to hike interest rates again.

The USD is falling across the board as US treasury yields eased and as investors look ahead to US PPI inflation data and tomorrow’s Fed rate announcement tomorrow.

PPI is expected to rise to 8.7%, YoY in February, up from 8.3%.

Where next for GBP/USD?

GBP/USD found support yesterday at the critical 1.30 level has rebounded to around 1.3030 Friday’s closing level.

The chart is still bearish as the price trades below its 50 & 100 SMA on the 4-hour chart, and the RSI remains below 50, suggesting that there could be more downside to come, which it is out of oversold territory.

Sellers would need to break down 1.30 in order to spark a deeper selloff towards 1.29 round number and 1.2820 the November 2020 low.

Meanwhile, buyers are looking for a move over 1.3080, the low March 8 low to expose the 50 sma at 1.3160, and last week’s high of 1.32.

gbpusd chart


FTSE falls as China locks down more cities

The FTSE and its European peers are heading for a negative open, tracing weakness in Asia overnight.

Chinese data was upbeat, with industrial production rising 7,5% and retail sales jumping 6.7%.

However, fears over the rising COVID cases and more lockdown restrictions in the world’s second-largest economy are hurting risk sentiment and pulling commodity prices lower across the board.

Oil trades a further 5% lower, so oil majors are likely to be under pressure. Base metals are also taking a hit as China, the world’s largest metal consumer, sees 45 million inhabitants locked down.

Russia Ukraine peace talks are also in focus and could impact risk sentiment across the session.

Where next for the FTSE?

The FTSE ran into resistance at 7225 yesterday, a level that has offered support and resistance on several occasions across the past year. Sellers re-entered the market here and have brought the index lower towards the key 7000 psychological level.

The RSI is supportive of further downside while it remains out of the oversold territory. Sellers will want to see a break below 7000 to open the door to 6950 ahead of 6820.

Buyers will be looking for a move over 7225 to expose the 100 sma at 7350 and 7400 the November high.

FTSE chart


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Related tags: Forex GBP/USD Indices FTSE

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European Open: EUR/USD grinds higher ahead of EU GDP and US retail sales
Close-up of market chart
European Open: EUR/USD grinds higher ahead of EU GDP and US retail sales
Close-up of market chart
EUR/USD grinds higher ahead of EU GDP and US retail sales
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