GBP/USD Forecast: July monthly low at 1.3571 at sight

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3737

UK employment figures were upbeat, with the unemployment rate down to 4.7%.
The UK will publish July inflation data, the CPI is foreseen at 2.2% YoY.
GBP/USD is breaking a critical support level, may fall to 1.3571.

The GBP/USD pair fell to a fresh August low of 1.3725 on the back of the resurgent dollar’s demand and despite encouraging UK employment data. The country reported an ILO unemployment rate of 4.7% for the three months to June, below the previous 4.8%. The Claimant Count Change printed at -7.8K in July, much better than the previous -114.8K. Additionally, Average Earnings including Bonuses for the three months to June, rose 8.8%, beating expectations and improving from the previous 7.4%.

The upbeat figures were overshadowed by prevalent risk-aversion, exacerbated by softer than expected US data. The UK will publish July inflation data on Wednesday. The Consumer Price Index is foreseen at 2.2% YoY, down from 2.5% in the previous month. The Producer Price Index is expected at 4.8% in the same period, up from the previous 4.3%.

GBP/USD short-term technical outlook

The GBP/USD pair is trading a few pips above the mentioned daily low, maintaining a firmly bearish tone in the near term. The 4-hour chart shows that the pair is hovering around the 61.8% retracement of its July range, with a downward extension favoring a full retracement toward 1.3571. In the mentioned time frame, the 20 SMA accelerated lower, now crossing below a flat 200 SMA. Finally, the Momentum indicator heads firmly lower within negative levels, while the RSI indicator consolidates within oversold readings.

Support levels: 1.3720 1.3675 1.3630

Resistance levels: 1.3770 1.3825 1.3860

View Live Chart for the GBP/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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