The price of GBPUSD continues to remain range bound. With a lack of direction in the market, what should traders be looking for?
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The latest GDP data for the United States shows a significant slowdown in economic growth. The Advance GDP estimate for the first quarter of 2023 was 1.1%, down from the previous quarter’s 2.6%. This is below market expectations and is primarily due to weak consumer spending and a decline in business investment.The Federal Reserve will likely take this into consideration when making decisions on monetary policy, with a possible delay in interest rate hikes.
On the other hand, the latest US Unemployment Claims report shows a decrease in the number of people filing for unemployment benefits. Initial claims fell to 230,000 from the previous week’s 245,000. This indicates continued strength in the labor market, with businesses adding jobs and people finding employment. The unemployment rate is currently at a historically low level of 3.5%, which is a positive sign for the overall economy. The Federal Reserve will likely view this as a positive indicator and may take it into account when making decisions on monetary policy.
Turning to the UK, the latest inflation rate data shows a slight decrease from 10.4% to 10.1%. While this is a positive development, it still remains well above the Bank of England’s target range of 2-3%. This puts a dent in the Bank of England’s plans to hike interest rates, as they will need to consider the impact of higher rates on inflation. They may choose to delay any rate hikes until inflation comes down further. However, the lower inflation rate does provide some relief for consumers, who have been facing higher prices for goods and services. Overall, the Bank of England will need to carefully balance inflation concerns with the need to support economic growth and employment.
The price on the chart has traded through multiple technical levels and some observations included:
- Price is trading within a consolidation at the top of a higher time frame range.
- Price stabilizing around the 1.2450 range highs could be a sign that the price will trade higher.
- Buyers looking to get into this market, could consider longs around the minor range lows.
- A break of this minor consolidation would see prices trade towards 1.2650.
Have you watched our USDJPY analysis? You can see it here.
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