GBP remain at risk of adverse political events such a leadership challenge to Theresa May.
A busy week of economic data releases for the UK started today with a jobs report which came out largely in line with market expectations. UK wages were up 2.5% year-on-year for the three months ending in May. The claimant count rose slightly, but the unemployment rate remained at a low of 4.2%. At today’s Bank of England (BoE) Financial Stability Report, Governor Mark Carney remained non committal around Brexit issues by suggesting there are potential risks although he deemed it premature to judge the white paper. All of this is setting the stage for the BoE to hike in August. However, the GBP may remain at risk of adverse political events such a leadership challenge to Theresa May.
GBPUSD potential inverted Head & Shoulder pattern
On the daily chart, GBPUSD appears to be forming an inverted head and shoulders pattern with a target to 1.3570 which is also the 38.2% retracement of the highs in April. The pair will need to break the 23.6% retracement at 1.3360 in order to give confidence that the significant reversal is likely to happen. However, a break 1.3150 will result in a continuation of the down trend and another test of 1.3050. There is near term support at 1.3210.
GBPJPY stalled at trend line resistance near 149.20
In the 4-hourly timeframe, GBPJPY has been in an uptrend and has stalled at trend line resistance near 149.20. A break of this level could open the way for a continuation to 150.30 and then 152.00. On the flip-side, if the resistance holds, a reversal below 148.55 could see the pair trade back down towards support at 147.80.