A weekly update on US unemployment claims revealed weaker-than-expected data. The {initial jobless claims for the previous week were expected to contract from 229K to 218K. The indicator decreased from 233K to 231K. Likewise, the number of continuing claims for unemployment insurance fell from 1,331 mln to 1,328 mln last week.
However, before the publication, the metric was expected to decline from 1,331 mln to 1,310 mln. By and large, the actual figures happened to be way below the forecast. So, the official data revealed that current conditions in the US labor market are a bit worse than expected. For this reason, the US dollar dipped overnight.
Today market participants are alert to revised PMIs for the UK and the US. They are likely to confirm flash estimates already priced in by the market. Hence, they will hardly influence market quotes. Unlike PMIs, preliminary inflation data for the Eurozone will significantly affect market sentiment.
The annual CPI is expected to accelerate to 8.3% from 8.1%. Thus, inflationary pressure has been escalating in Europe. The ECB has already signaled an increase in the refinancing rate at the next policy meeting. Nevertheless, a rate hike will hardly be able to fix the problem. As a result, the single EUR/USD will come under pressure, dragging the pound sterling down with it.
Technical Outlook
Following a brief upward retracement, GBP/USD went down again. Earlier, the currency pair left the trading range of 1.2155/1.2320. The lower border of the trading range now serves as resistance so that traders can increase short positions.
The H4 and D1 RSI technical instrument is moving in the lower area of 30/50, thus indicating selling sentiment on GBP/USD. Moving averages on the H4 and D1 Alligators are directed downward, matching the trajectory of the overall trend.
If the price settles below 1.2100 on the 4-hour chart, it will decline lower. Amid the downward move, the currency pair will head for 1.2000. Complex indicator analysis generates a sell signal for intraday, short-term, and medium-term trading on the back of the overall downtrend.