• Data showed a higher-than-expected number of unemployment claims in the UK.

• Average UK weekly earnings minus bonuses grew by 5.7%.

• The pound has gained about 2.1% in 2024 against the dollar.

The GBP/USD outlook is slightly bearish as the pound retreats from recent highs after downbeat employment figures. However, the bullish trend might continue since the dollar is weak amid an increase in Fed rate cut expectations.

Data on Thursday showed a higher-than-expected number of unemployment claims in the UK in the previous month. The claimant count was 32,300, compared to estimates of 23,400. Still, this was a decline from the last reading of 51,900. If unemployment is higher than estimated, the economy performs poorer than expected. This could pressure the Bank of England to start lowering borrowing costs.

However, separate employment figures revealed that average weekly earnings minus bonuses grew by 5.7%, meeting forecasts. Furthermore, data from the previous session showed that service inflation remained high at 5.7%. Therefore, market participants have lowered the chances that the BoE will cut rates in August from 50% to 40%.

Notably, unlike other major currencies, the pound has remained resilient against the dollar this year. So far, it has gained about 2.1% in 2024 against the dollar. The recent rally came due to increased expectations for a Fed rate cut. Inflation in the US has maintained its downtrend, giving policymakers more confidence it will reach the target. As a result, investors are placing a 100% likelihood of a rate cut in September. This has pressured the dollar, allowing the pound to rally. Retail sales data tomorrow could shed more light on the UK economy.

GBP/USD key events today

• US unemployment claims

GBP/USD technical outlook: Price retreats to 30-SMA after bearish RSI divergence

On the technical side, the GBP/USD price is in a bullish trend that recently made a new high. However, the price is currently pulling back and is nearing the 30-SMA support. Bulls made a solid attempt to push the price above the 1.3002 key level.

However, as the price made a higher high, the RSI made a lower one, indicating weakness. Consequently, the price fell back below the key level. If bears are stronger, they might take over with a break below the 30-SMA. However, if the SMA holds firm, bulls might retest the 1.3002 level and break above to make a higher high.

https://www.forexcrunch.com/blog/2024/07/18/gbp-usd-outlook-pound-slips-below-1-30-amid-poor-jobs-report/