GBP/USD is almost unchanged at the start of the trading week. In the North American session, the pair is trading at 1.3156, up 0.04% on the day.
Pound hits 8-week high
The US election of Joe Biden as president-elect triggered a massive selloff of US dollars last week, and the pound has maintained positive momentum in Monday trading. GBP/USD climbed 1.6% last week, and on Monday the currency climbed above the 1.32 line for the first time since September 7th.
UK employment reports next
The UK releases October employment reports on Tuesday, and the numbers could have a significant impact on the movement of GBP/USD. Wage growth has been non-existent in recent months, as the Average Earnings Index last posted a gain in April. However, analysts are projecting that the index will push back into positive territory in September, with a forecast of 1.0 per cent. Unemployment claims slowed to 28.5 thousand in September, which was much lower than the estimate of 78.8 thousand. The October estimate stands at 36.0 thousand, a very respectable number. Finally, the unemployment rate, which has risen in the past two months, is expected to climb from 4.5% to 4.7%.
Bank of England hits QE button
In the era of ultra-low interest rates, central banks are resorting to other easing methods in order to bolster sluggish economic growth. With UK rates pegged at a record low 0.10%, the Bank of England opted for a significant increase in QE on Thursday. The bank hiked QE to GBP 895 billion, up from 745 billion beforehand. The forecast stood at 845 billion. The easing in monetary policy didn’t prevent the British pound from racking up sharp gains last week, as the US dollar played the punching bag for the pound and other major currencies. The BoE recently stated that negative rates are a possibility, although it would likely resort to other easing measures first before taking such a drastic move.
- GBP/USD tested resistance at 1.3186 earlier in the day. It remains a weak line. Above, there is resistance at 1.3224
- There is support at 1.3102, followed by support at 1.3056
- The pair pushed above the 50-day MA late last week