GBP/USD Trends: Implications of UK and US Economic Indicators

GBP/USD is facing challenges in the aftermath of the recent data release from the UK's Office for National Statistics. According to the data published early Tuesday, the ILO Unemployment Rate in the three months to March edged higher to 4.3% from the previous 4.2%, aligning with analysts' expectations. Meanwhile, annual wage inflation, indicated by the change in the Average Earnings Including Bonus, remained steady at 5.7%, surpassing market forecasts of 5.3%. Despite these mixed indicators, Pound Sterling failed to garner significant momentum.

The price action has exhibited a reversal with a negative delta, signaling heightened activity from both buyers and sellers within an imbalance on the daily chart. Our strategy involves capitalizing on the inefficiency around the 1.24675 area, where there is potential for further downside movement. The volume remains subdued, as observed in the futures market, which has retraced to retest the previous Point of Volume of the preceding session, suggesting a downward bias for the GBP/USD pair.

In the upcoming early American session on Tuesday, the US Bureau of Labor Statistics is set to release the Producer Price Index (PPI) data for April. Investors anticipate a 0.2% monthly rise in the PPI ex Food & Energy. A core PPI increase exceeding 0.3% could bolster the USD against its counterparts, while a figure below market consensus might buoy GBP/USD. However, given the proximity to Wednesday's Consumer Price Index (CPI) data release, any market reaction is likely to be short-lived.

British Pound Futures