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GBP/USD ticks higher after Labor market data

It looks like the GBP/USD pair is forming a short-term upside reversal pattern. Is the decline over, then?

The greenback eased today, pushing the GBP/USD pair nearly half a percent higher during the London session. At the time of writing, the pair was changing hands at around 1.3450, slightly bouncing back from the fresh one-year lows printed in the last week.

UK jobs market data in focus

Earlier in the day, the UK Office for National Statistics (ONS) informed that the unemployment rate improved to 4.3% in September, down from 4.5% previously . At the same time, the claimant count change rose to -14,900 from -51,000 in September.

Additionally, the number of workers on payrolls rose 0.6%, or 160,000, between September and October to 29.3m.

It might take a few months to see the full impact of furlough coming to an end, as people who lost their jobs at the end of September could still be receiving redundancy pay. However, October's early estimate shows the number of people on the payroll rose strongly on the month and stands well above its pre-pandemic level. Sam Beckett, ONS head of economic statistics, said.

Robust employment data boosts the case for the Bank of England (BoE) to hike rates in December. However, markets are still priced for another rate hike in February, which might be relatively hawkish and currently uncomfortable for the BoE.

On the other hand, the Fed is projected to start raising rates by July 2022, and the market is pricing nearly three rate hikes in 2022 as inflation continues to soar.

US data under scrutiny

Later in the day, the US retail sales will be released, and market participants expect a modest improvement there . However, both the ex-auto and control group indicators are seen sliding , possibly undermining the US dollar.

Additionally, the US industrial production and capacity utilization numbers will be published. Lastly, several FOMC governors will speak today, likely causing volatility in the markets.

Short-term chart looks bullish

Technically speaking, sterling managed to get back above previous lows at 1.3415 as stop-losses were destroyed below that level. If it closes today above 1.3415, it could be a bullish reversal signal, targeting the critical resistance at 1.36.

It needs to climb above 1.36 to cancel the medium-term downtrend.

Alternatively, if the selling pressure reappears, the intraday support stands at 1.3415, while the swing support is at last week’s lows of 1.3350. A breakdown below it would likely send the Pound further lower toward 1.30.

Marek is a cryptocurrency enthusiast with several years worth of experience in the industry. He has been working with numerous cryptocurrency and FinTech projects, where his main r...

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