Two trades to watch: GBP/USD, Gold

GBPUSD rises as unemployment drops to 48 year low

GBPUSD is extending its rebound for a second day following UK labour market data.

Unemployment unexpectedly fell to its lowest level in 48 years, ticking lower to 3.7% in the three months to March, down from 3.8%.

Wages excluding bonuses rose 4.2%, falling sharply in real terms as inflation soars, yet wages including bonuses jumped to 7%, up from 5.6%.

Job vacancies continue to rise with fewer unemployed people than vacancies for the first time since records began.

Looking ahead, US retail sales and a speech by Federal Reserve Jerome Powell will be in focus.

Where next for GBP/USD?

GBP/USD rebounded from 1.2250, the 2022 low, rising above 1.23. The bullish crossover on the MACD is keeping buyers hopeful of more upside.

Bulls will look to retake 1.2410, the April 28 low, before 1.25, the 20 SMA, and then 1.2635, the May high.

Failure to retake resistance at 1.2410 could see the price rebound lower, back below 1.23. A fall below 1.2155 is needed to create a lower low.

Gold looks to US retail sales

Gold rebounded off a low of 1786 yesterday, a fresh multi-month low lifted by falling Treasury yields and a retreating USD. Concerns over global growth after disappointing Chinese and US manufacturing data helped raise the precious metal.

Today Gold is holding steady as concerns it looks towards US retail sales data.

Expectations are for sales to rise to 0.7% MoM in April, up from 0.5%, even as inflation sits at a 40-year high and consumer confidence at an 11-year low.

Concerns persist over the Fed moving aggressively to hike interest rates and tame inflation. Attention will also be on a speech by Fed Chair Powell, where the market will look for clues as to the likelihood of a 75bp point rate hike in June.

Where next for Gold prices?

Yesterday’s recovery ran into resistance around 1830, just below the key 200 DMA resistance at 1837, which is the next target for buyers. Sustained strength beyond here could see the rising trendline resistance at 1853 come into play.

However, it is worth noting that Gold continues to trade in a steep falling channel, keeping sellers hopeful of further downside. A move below $1812, a level that has offered support and resistance on several occasions, could open the door to 1786, yesterday’s low, to create a lower low.

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