GBP/USD & DAX Outlook Amidst Key Economic Data

GBP/USD & DAX Outlook Amidst Key Economic Data
  • GBP/USD Rises After UK Jobs Data: The British Pound strengthened against the US Dollar, responding to the latest UK jobs data. This rise occurred despite mixed signals from the job market, including a decrease in vacancies but higher-than-expected wage growth.
  • Significant Decline in UK Job Vacancies: There was a notable drop of 43,000 in UK job vacancies, marking a consistent downward trend over recent quarters. This decline suggests a broad-based slowdown in economic activity.
  • Unexpected Increase in Wage Growth: Despite a decline in vacancies, wage growth in the UK, including bonuses, was higher than anticipated, reaching 7.9%. This rate is among the highest since records began in 2001 and could influence monetary policy decisions.
  • US Inflation Data Impact on the Dollar: The stability of the US Dollar is closely linked to the upcoming US inflation data. A projected decrease in inflation could influence Federal Reserve policies, potentially impacting the currency’s strength.
  • DAX Trades Cautiously Ahead of Economic Data: The German stock index, DAX, shows a cautious trading pattern as investors await key economic data, including Eurozone GDP and US inflation figures, which could significantly impact market trends.

GBP/USD Reaches Weekly Peak Following UK Job Market Insights

The British Pound (GBP) against the US Dollar (USD) is experiencing an upswing, fueled by a mix of UK employment data. While job vacancies show a decline, indicating possible economic slowdowns, wage growth exceeds expectations.

In detail, unemployment remains constant at 4.2%. The notable drop of 43,000 in job vacancies during July-September, compared to April-June, marks the 15th consecutive quarterly decrease. This decline spans 14 out of 18 industries, hinting at a widespread economic impact. However, wages including bonuses rose more than anticipated, reaching 7.9%, though slightly down from 8.2%.

This wage surge, one of the highest since 2001, could influence the Bank of England’s (BoE) interest rate decisions, boosting the Pound’s value.

The UK anticipates inflation data, expected to reveal a decrease to 4.8% from 6.7%. This potential drop might balance concerns over the unexpected wage rise.

In the US, the Dollar’s stability awaits the release of inflation data, projected to show a decrease to 3.3% year-over-year. A decline in inflation might lead to a halt in Federal Reserve rate hikes.

GBP/USD Technical Analysis

GBP/USD demonstrates strength, rebounding from the 20-day Simple Moving Average (SMA) and surpassing the 50-day SMA. The focus now shifts to 1.2340, the October high, as a key target. Surpassing this level could see an upward move toward 1.2440, the 200-day SMA. Conversely, a fall below the 50-day SMA at 1.2255 and 20-day SMA at 1.2210 might steer the price toward 1.21, the November low, followed by 1.20409, the October low.

DAX’s Cautious Trade Awaiting Key Economic Data

The German stock index, DAX, opens cautiously as investors anticipate Eurozone GDP and US inflation data. US Consumer Price Index (CPI) figures are the main focus, potentially influencing Federal Reserve rate decisions. The CPI is expected to decrease to 3.3% year-over-year in October. A higher-than-expected inflation rate could trigger fears of another Fed rate hike, impacting stock demand. The market currently anticipates a 90% chance of the Fed maintaining rates in December.

Eurozone GDP data, projected to confirm a 0.1% contraction quarter-over-quarter, will also be in the spotlight. Weak growth might ease the European Central Bank’s (ECB) pressure to maintain its hawkish rate stance, potentially leading to earlier rate cuts.

Additionally, the German ZEW economic sentiment is forecasted to show improvement, reflecting easing inflation in the region.

DAX Technical Analysis

The DAX continues its recovery from 14600, surpassing the 20-day and 50-day SMAs and a downward trendline, fueling optimism for further gains. A breakthrough above 15500 could open the way to the 200-day SMA at 15650. Support levels are found at 15280 (50-day SMA) and 15175 (trendline support), followed by the psychological barrier of 15000 and the 20-day SMA.