UK Economy Expands in January, US Jobs Data Key for GBP/USD

GBP/USD – prices, charts and analysis

• The UK economy grew 0.3% in January, beating expectations.
• The latest US jobs report will be released at 13:30 GMT.

The UK economy grew 0.3% in January, beating forecasts of 0.1% and negative 0.5% in December. In the three months ended January 2023, growth was flat. According to the Office for National Statistics (ONS)

“The service sector grew by 0.5% in January 2023, after declining by 0.8% in December 2022, with the largest contributors to growth in January 2023 being education, transportation and storage, human health activities and arts , entertainment and leisure activities came from. All have recovered from falls in December 2022.

ONS monthly GDP estimate – January 2023

For all market moving data releases and events go to DailyFX economic calendar

GBP/USD surged on the release, hitting a high of 1.2020, but with the release of the latest US Jobs Report (NFPs) this afternoon, major tests lie ahead for Cable. The monthly look at data on nonfarm payrolls employment, hours worked and wages is expected to add 205,000 new jobs, although that figure should be taken with caution. The last ten NFP numbers have all beaten market expectations, some by a lot, and today’s release could follow suit.

Cable should now settle in a tight range ahead of the NFP release. While the recovery from the 1.1800 level over the past few days is welcomed by sterling bulls, the short term chart pattern shows a bearish succession of lower highs and lower lows that hold. Initial support level stands at 1.1800/04 before 1.1740 comes into play. If NFPs break recent pattern and below expectations, previous highs at 1.2065 and then 1.2143 will act as the first two levels of resistance. All eyes are on the US.

GBP/USD daily chart – March 10, 2023

All charts via TradingView

Retailer data shows a bullish contrarian bias

Data from retail traders shows that 57.33% of traders are net long, with the ratio of traders long to short being 1.34 to 1. The number of traders net-long is 20.42% lower than yesterday and 13.50% lower than last week, while the number of traders net-short is 33.04% higher than yesterday and 20.19% higher than last week.

We tend to be contrarian on sentiment and the fact that traders are net long suggests GBP/USD prices could fall further.

Still, traders are less net long than yesterday and compared to last week. Recent mood changes warn that the flow The GBP/USD price trend could soon reverse to the upside, although traders remain net-long.

What is your opinion on this GBP/USD – bullish or bearish?? You can let us know using the form at the bottom of this article or contact the author via Twitter @nickcawley1.