GBPUSD drops 0.74% amid diverging economic data from the US and UK

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.74%	-98.6 Pips
Week to-date	-0.78%	-104.9 Pips
October	-0.72%	-96.2 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In the United States, the Job Openings and Labor Turnover Survey (JOLTS) data for August indicated an increase to 8.04 million job openings, up from a revised 7.711 million in July, according to the Bureau of Labor Statistics. This uptick in job openings points to a stronger labor market as more positions are available, suggesting that businesses are actively seeking to expand their workforce. Additionally, the Chicago Purchasing Managers’ Index (PMI) climbed to 46.6 points in September from 46.1 points in August. While the PMI remains below the 50-point mark, which indicates contraction in the manufacturing sector, the slight increase suggests a modest improvement in business conditions.

In the United Kingdom, the economic data shows a deceleration in GDP growth. The year-on-year GDP growth for the second quarter dropped to 0.7%, down from 0.9% in the first quarter, as reported by the Office for National Statistics. Similarly, the three-month GDP growth rate decreased to 0.5% in Q2 from 0.6% in Q1. These declining GDP figures suggest a slowdown in economic activity, which could be attributed to various factors such as weak consumer spending or slowing business investment.

The recent data is likely to affect the GBPUSD exchange rate. With the U.S. job openings increasing and the Chicago PMI showing signs of improvement, the U.S. economy appears to be relatively stronger compared to the U.K. economy, which is experiencing slowing GDP growth. This disparity in economic performance can lead market participants to favor the U.S. dollar over the British pound, as evidenced by the drop in GBPUSD by -0.74% to 1.32784 on Tuesday. In the absence of significant upcoming economic events, the current trends are likely to persist, potentially exerting further downward pressure on the GBPUSD pair.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday dropped -0.74% to 1.32784. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 1.32135 with break below could see further selling pressure towards S2 at 1.31486. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.33895 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.32366 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -0.78%.

Key levels to watch out:

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