The GBP/USD pair remains under pressure, trading below the 1.3500 mark during Wednesday’s European session. The British Pound is struggling after a weak UK employment report, while the US Dollar gains strength on optimism over US-China trade talks ahead of the key US inflation data release.
Technically, the 4-hour chart shows bearish momentum building. The Relative Strength Index (RSI) dropped below 40, and the pair closed below both the 20-period and 50-period Simple Moving Averages (SMA).
The 1.3500 level, where the 100-period SMA lies, acts as a pivot point. If this level holds as resistance, support may be found near 1.3400 (200-period SMA) and 1.3360 (lower boundary of the ascending channel). On the upside, resistance levels are at 1.3540-1.3550 and 1.3600.
The UK’s Office for National Statistics reported a rise in the unemployment rate to 4.6% for the three months ending in April, the highest since June 2021. Wage growth also slowed, with average earnings excluding bonuses increasing by 5.2%, below expectations. These factors have dampened demand for the Pound, raising concerns about possible Bank of England rate cuts later this year.
Meanwhile, the US Dollar is strengthening amid hopes that US and Chinese negotiators will resolve trade tensions. Talks continued for a second day in London, with reports that the US may ease export controls on some Chinese goods. This positive sentiment supports the USD and adds downward pressure on GBP/USD.
With no major UK data expected before the US Consumer Price Index release, market focus remains on the US inflation figures, which could drive further moves in the GBP/USD pair.
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