GBP/USD has lost ground on Tuesday. In the European session, the pair trading at 1.3012, down 0.40% on the day.
UK employment picture cloudy
The UK released a host of employment numbers, with mixed results. Claimant Count showed an increase of 28.1 thousand in September, which was much lower than the estimate of 78.8 thousand. The number of new claimants has leveled off nicely since the dark days of April, in which there were a staggering 856.5 thousand new claims, a reflection of the downturn due to the first wave of Covid-19. However, the unemployment rate rose sharply to 4.5% in August, up from 4.1% beforehand. This was the highest level since May 2017. Wage growth clawed up to zero in August, after three straight declines. With another wave of Covid-19 hitting the UK, investors remain nervous, and the pound has fallen close to the symbolic 1.30 level on Tuesday.
Key Brexit Meeting Looms
The European Council holds a critical summit on Thursday, with the Brexit crisis at the top of the agenda. The EU is clearly frustrated with the pace of the negotiations and what it considers lack of flexibility by the UK. On Tuesday, Michael Roth, Germany’s Minister for Europe, insisted that the UK would have to give ground on the issues of fishing rights and state subsidies. Roth warned that “we are at a very critical stage in the negotiations. We are extremely under pressure and time is running out”. Whether the sides can bridge the formidable gaps and reach an 11th hour agreement remains questionable.
GBP/USD Technical
- There is resistance at 1.3097. Above, there is a resistance line at 1.3129
- GBP/USD broke through support at 1.3019 in the European session. The next support line is at 1.2973
- GBP/USD continues to put downward pressure on the 20-day MA. If the pair breaks below this line, it would signal a downward trend
- The 50-day MA remains relevant, as the pair has broken below the line on Tuesday
