Daily Analysis GBPUSD - September 2023

On Thursday, the latest US employment data for September 1st showed Initial Jobless Claims at 216K, down from 229K previously, surpassing the expected increase of 234K. In Q2, US Unit Labor Costs rose to 2.2%, contrasting expectations of stability after the previous 1.6%. Despite this, the US Dollar (USD) remains strong, driven by a string of positive economic indicators. The US Dollar Index (DXY), measuring its performance against six major currencies, now hovers around 104.90, though slightly below Thursday's peak since April.

The US Federal Reserve (Fed) plans to maintain high interest rates for an extended period, with a potential 25 basis point (bps) hike in November or December. This hawkish approach bolsters the USD. Conversely, the belief that the Bank of England (BoE) nears the end of its policy tightening may weigh on the Pound Sterling (GBP) and the GBP/USD pair's upside potential.

BoE Governor Andrew Bailey recently indicated that the central bank is nearing the end of its rate hikes, but he cautioned that borrowing costs could still rise due to persistent high inflation.

GBP/USD is persisting in its bearish trend, heading towards the 1.2400 support level, where the 200-day moving average (200MA) and the descending channel's lower boundary are converging, creating a point of confluence. A temporary correction is happening but the big picture still bearish for the pair.