GBP/USD Extends Decline, UK’s Employment Report Next

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Key Highlights

• GBP/USD extended decline and tested the 1.3000 support zone.
• A key declining channel is forming with resistance near 1.3140 on the 4-hours chart.
• EUR/USD is facing a strong resistance near 1.1050 and 1.1080.
• The UK ILO Unemployment Rate could drop from 4.1% to 4.0% in Jan 2022 (3M).

GBP/USD Technical Analysis

The British Pound started a major decline from well above 1.3500 against the US Dollar. GBP/USD traded below the 1.3320 and 1.3250 support levels to enter a bearish zone.

Looking at the 4-hours chart, the pair gained bearish momentum below the 1.3200 level. There was also a close below the 1.3200 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The decline was such that the pair even tested the 1.3000 support zone. A low is formed near 1.3001 and the pair is now consolidating losses.

An immediate resistance on the upside is near the 1.3100 level. It is close to the 50% Fib retracement level of the recent decline from the 1.3195 swing high to 1.3013 low.

There is also a key declining channel forming with resistance near 1.3140 on the same chart. A clear move above the trend line resistance might start a steady increase towards the 1.3200 zone. Any more gains might send GBP/USD towards the 1.3320 resistance.

If there is no upside break above 1.3200, the pair could continue to move down. The first major support is near the 1.3020 level. The main support is near the 1.3000 zone. A successful break below the 1.3000 support could start another major decline.

Looking at EUR/USD, the pair might remain in a bearish zone unless there is a clear move above the 1.1080 resistance zone.

Economic Releases

• UK Claimant Count Change for Feb 2022 – Forecast -13.0K, versus -31.9K previous.
• UK ILO Unemployment Rate for Jan 2022 (3M) – Forecast 4.0%, versus 4.1% previous.
• German ZEW Business Economic Sentiment Index for March 2022 – Forecast 10.0, versus 54.3 previous.