The UK economy has inflation figures ahead that could hurt the GBPUSD further.
GBPUSD – Daily Chart
GBPUSD has broken an uptrend resistance and may fall further, with 1.25 an initial target for the pullback.
The pound did not find support from a more robust employment figure, with an extra 23,000 jobs ahead of the economy than expected. However, the unemployment rate remains at around 4.2%.
Core inflation on Wednesday will be released at 3pm HKT, with the figure expected to dip to 3.8% from 3.9%. That removes some of the potential for elevated interest rates in the pound.
Quicker rate cuts in the country could come with a sharper drop in inflation, which would also boost the economy.
There will also be further US economic data overnight, with retail sales expected to inch higher at 0.4% from 0.3%. A more substantial number could boost the current US dollar strength. That figure will be released at 9:30 pm HKT.
That will close out the higher level data until Friday with a late consumer confidence measure for the United States. Therefore, the trend on Wednesday should continue into the weekend, with the UK inflation the most important.
Election talk is sweeping the UK, with a vote expected later this year.
According to the latest polls, the Conservative Party will lose by 13.5%. That could be a negative for the British pound over the year as investors consider the tax and spend policies typical of the Labor government.
This recent high in the GBPUSD could continue to play out as a correction, leading to a change in trend to bearish. The US has its election later in the year. An Iowa vote has Donald Trump firmly in control as the choice of Republican voters. However, the situation could get tense throughout the year as the rival Democrats want him removed from the ballot. Another debt argument is looming in the United States, but they have a habit of being passed.