GBPUSD Price Forecast: $1.2210 Levels Would Bring $1.2350 into Play

It was another busy start to the day for the UK market. Following Monday’s GDP data that contributed to a 1.50% in the Pound, today’s market focus shifted to UK labor market data.

Economic data from the UK included claimant counts for May and the unemployment rate for April.

Employment Figures Provided Pound Comfort

In April, the unemployment rate rose from 3.7% to 3.8% versus a forecasted decline to 3.6%.

Average earnings also fell short of forecasts, with average earnings plus bonus rising by 6.8% in April versus a forecasted 7.6% increase.

Of greater significance, however, were claimant count figures for May.

Following a 65.5k fall in claimants in April, claimant counts fell by a modest 19.7K. Economists forecast a 49.4k decline.

According to the Office for National Statistics,

• While the unemployment rate unexpectedly rose in April, quarterly numbers were more upbeat.
• From February to April 2022, employment was up by 177k versus a forecasted 105k rise.
• The 3-month rise in employment to April led to a 0.2 percentage points decrease in the unemployment rate from February to April 2022.
• From March to May 2022, job vacancies rose to a new record of 1,300,000.

GBPUSD Price Action

At the time of writing, the Pound was up by 0.26% to $1.2162.

A mixed start to the day saw the Pound fall to a morning low of $1.2121 before striking a high of $1.2209.

The Pound left the Major Support and Resistance Levels untested early on.

Technical Indicators

The Pound will need to move back through the $1.2186 pivot to retarget the First Major Resistance Level at $1.2265.

A marked shift in market risk sentiment would be needed to support a breakout from the morning high of $1.2209.

An extended rally would test resistance at Monday’s high of $1.2321 and the Second Major Resistance Level at $1.2401.

Failure to move through the pivot would bring the First Major Support Level at $1.2051 into play.

Barring another extended sell-off throughout the day, the Pound should avoid sub-$1.20. The Second Major Support Level sits at $1.1972.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. The Pound sits below the 50-day EMA, currently at $1.2415. The 50-day EMA fell back from the 100-day EMA. The 100-day EMA eased back from the 200-day EMA, Pound negative.

A return to $1.2250 would give the bulls a run at the 50-day EMA.

Next Up

Wholesale inflation figures from the US are due out later today. A spike in US wholesale inflation would test support for the Pound.

With the markets looking ahead to tomorrow’s FOMC monetary policy decision and the BoE’s policy decision on Thursday, volatility will likely persist.