The great Britain Pound remains slightly strong against the U.S dollar after Office for National Statistics in the UK said that the unemployment rate fell to a six-year low 5.7% in the three months to December from 5.8% in the preceding three month-period and better than expectations for a reading of 5.8%.
The report also showed that the claimant count fell by 38,600 last month, compared to expectations for a decline of 25,000. December’s figure was revised to a drop of 35,800 people from a previously reported decline of 29,700.
Data also showed that the U.K. average earnings index, including bonuses, rose 2.1% in the three months to December, above forecasts for 1.7% and after increasing by 1.8% in the three months to November. This is the same fundamental report the Central Bank of England’s President Gov Carney emphasized on during his last speech on Feb 12. I believe with this report, a boost in the single currency would be seen with a rate hike preceding it soon.
However before the week ended an significant drop was seen in sterling, which came after the Office for National Statistics said U.K. retail sales fell 0.3% in December, compared to forecasts of a 0.2% decline. On a year-over-year basis, retail sales rose 5.4%, falling slightly short of expectations of 5.9%. This report is not considered as a threat to the single currency as we know over-all the Great Britain has strength.
Meanwhile Wednesday’s minutes of the Federal Reserve’s January meeting showed that some officials thought that raising rates too soon could weigh on the U.S. economic recovery, and that a deterioration in the global economic outlook could also pose a threat to the recovery.
Weekly bias remains bullish as 21 EMA remains crossed upward the 55EMA. We also have a price rejection at the 55EMA as price rebounded the Exponential Moving Average which signifies it acting as a support and its making its way back to retest 1.54781 resistance. A break and close above 1.54781 resistance would trigger more rise to 1.56185 ( December 31, 2014 high).
However while further rise cannot be ruled out, we’d expect upside to be limited by 1.5540, 38.2% retracement of 1.6523 to 1.4950 at 1.5551 and bring down trend resumption. On the downside, below 1.5315 minor support will bring retest of 1.4950 low first.
Key fundamental reports to monitor this week is the GBP second estimate GDPq/q, USD CPI/Core CPI, Prelim GDP q/q, New Home Sales and Fed Chair Yellen Testifies.