The GBP/USD exchange rate bounced back on Friday after the US published mixed financial results. It has risen in the past three straight days and reached to a high of 1.2245, the highest point since Tuesday.

Fed minutes ahead

The GBP/USD pair bounced back after the mixed US jobs data. According to the Bureau of Labor Statistics (BLS), the American economy added over 336k jobs in September after creating more than 220k in the previous month.

That report was better than the median estimate of 180k. It was also the biggest monthly increase in a few months. The US dollar weakened because of the closely watched wages report.

The average hourly earnings rose by 4.2% in September after rising by 4.3% in the previous month. It was a smaller increase than the median estimate of 4.3%. Wages also rose by 0.2% from a month earlier while the unemployment rate drifted upwards to 3.8%.

The wage growth figure is the most important because of its impact on inflation. Higher wages lead to more consumer spending and higher prices. 

The next important catalyst for the GBP/USD pair will be the upcoming US FOMC minutes scheduled for Wednesday. These minutes will provide more colour about what to expect in the next meetings.

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In the last meeting, the dot plot showed that most officials expect the bank will deliver at least one more hike this year. If this happens, the bank will push rates to the highest level in more than two decades.

The other crucial GBP/USD news will be the US consumer inflation data scheduled for Thursday. These numbers will likely show that the country’s inflation jumped to 4% in September as gasoline price jumped.

GBP/USD technical analysis

(Click on image to enlarge)

The GBP/USD has bounced back after it crashed to the multi-month low of 1.2025 in October. On the daily chart, the pair still remains below the 50-day moving average while the RSI has pointed upwards. Most importantly, the pair has formed a three white soldiers pattern, which is usually a bullish sign.

But caution is warranted since the pair seems to be forming a break and retest pattern by retesting the resistance at 1.2311, the lowest swing on May 26th. Therefore, the outlook for the pair is bearish as long as it is below 1.2311.

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