The GBP/USD currency pair remained bullish, above the 1.3200 level during the early part of Tuesday’s European session. This increase comes on the heels of UK employment data just released. This was led by a narrow improving ILO unemployment rate to 4.5% three months to April, as expected by markets. After experiencing serious losses on Monday, the duo recovered. It showed some astonishing level of defiance by rebounding off its key 1.3200 level of support.
These new employment figures paint a picture of calm before the storm in the UK labor market, even as unemployment has increased. Analysts noted that the report was likely to create a rosy and misleading picture of the overall economic picture. Nonetheless, traders were not dissuaded and pushed the GBP/USD higher on the session.
The top brokers for EUR/USD trading continue to make waves. According to an unnamed source, even with shifting economic indicators, interest in currency trading is stronger than ever.
In parallel with GBP/USD movements, traders are keenly awaiting the US Consumer Price Index (CPI) inflation report for April, scheduled for release by the Bureau of Labor Statistics at 12:30 GMT on Tuesday. This means the inflation index is set to rise. If it does, that would be a 2.4% annual rate of increase, sustaining the rate of growth we experienced in March. At the same time, core CPI inflation is expected to remain flat at 2.8% YOY.
With the US inflation data on the horizon, EUR/USD has been holding strong above the 1.1100 level. Market watchers have welcomed this stability as an indication of cautious optimism among traders. They are hoping, or at least preparing for, some market volatility when the inflation report comes out.
Gold prices experienced a recovery on Tuesday, with the precious metal hovering around $3,260 as market sentiment turned. The recovery of the precious metal takes place as first flush euphoria over a US-China trade deal starts to wear off. The recent pause in the escalating trade war between the two nations has rejuvenated market activity, although traders remain wary of potential flare-ups that could impact commodities like gold.
As “once in a generation” high-profile economic reports and geopolitical tensions continue to steer market dynamics, investors are watching in rapt attention. US CPI data due next Thursday will be key in dictating market sentiment over the coming week. Most importantly, it will shape price action across asset classes.