• The GBP/USD outlook shows a mixed picture of the UK labor market.
• Vacancies in the UK dropped in the three months to March.
• Trump’s tariffs have increased the likelihood of a recession. 

The GBP/USD outlook shows a mixed picture of the UK labor market with poor demand and strong wage growth. As a result, the pound held steady near its recent peaks. Meanwhile, the dollar drifted as market participants remained uncertain about Trump’s next tariff move. 

Data on Tuesday revealed that vacancies in the UK dropped in the three months to March, a sign that the demand for labor was down. However, pay growth remained strong, with average weekly earnings rising by 5.9%. The mixed labor report had little impact on the pound, which has remained strong due to dollar weakness. At the same time, upbeat UK GDP data last week improved investor sentiment.

On the other hand, the dollar was directionless on Tuesday after wild swings last week sent it tumbling. Market participants have paused to assess Trump’s recent tariff moves. The on and off levies have left most traders uncertain about the administration’s next move. However, the risk of a US recession looms large. 

On Monday, Fed’s Christopher Waller noted that Trump’s tariffs had increased the likelihood of a recession. Therefore, the Fed might be forced to lower borrowing costs despite high inflation.

GBP/USD key events today

After the UK employment report, market participants do not expect any more key releases from the UK or the US.

GBP/USD technical outlook: RSI suggesting a pullback

(Click on image to enlarge)

GBP/USD 4-hour chart

On the technical side, the GBP/USD price is challenging the 1.3200 resistance level. It trades well above the 30-SMA with the RSI near the overbought region, suggesting a strong bullish bias. Bullish momentum has remained strong since the price broke above the SMA and the 1.2880 key level.

However, this momentum is fading. The first sign was when bears made a solid red candle. Since then, bulls have struggled to make higher highs. At the same time, the RSI has made a bearish divergence in the overbought region. If bulls are weaker, then the price might soon pull back. 

A deep pullback will retest the 30-SMA or the 1.3000 key support level. However, the bullish bias will remain intact as long as the price trades above the SMA. 

More By This Author: