GBP/USD forecast, DAX forecast: Two trades to watch
GBP/USD rises after UK wages unexpectedly remain elevated. DAX rises after China GDP beats, German ZEW economic sentiment in focus.
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GBP/USD rises after UK wages unexpectedly remain elevated
- UK unemployment rises to 3.8%
- UK wages unexpectedly hold at 6.6%
- GBP/USD finds support on 20 sma
GBP/USD is rising towards 1.24 amid USD weakness, and as UK jobs Joe's an unexpected jump in wage growth fuelling inflation concerns.
The data from the ONS showed that UK unemployment rate ticked higher to 3.8% up from 3.7% and that the number of people applying for jobless claims jumped to 28.5k, up from 11.8k, suggesting that there are some signs of weakness starting to show.
However, average earnings, including bonuses, rose 6.6% in the three months to February, in line with the previous month and defying expectations of a slowdown to 6.2%, which could leave the BoE little choice but to keep hiking rates in its fight against inflation which is still five times the target 2% level. UK inflation data is due tomorrow.
The USD is easing after two days of gains following solid US data which reinforced expectations of another Fed rate hike in May. Manufacturing activity in the New York state rose for the first time in 5 months.
Investors will be monitoring US building permits data and a speech by Fed Governor Bowman for further clues over the future direction of rate hikes. The CME is pricing in a 87% probability of a 25 bps rate hike in May.
Where next for GBP/USD?
After running into resistance at 1.2546, GBP/USD has broken below the monthly rising trendline, taking out support at 1.2450.
The pair is currently finding support on the 20 sma at 1.24, which along with the RSI above 50 keeps buyers hopeful of further upside. A rise above 1.2450 could bring the 2023 high of 1.2546 back into focus, with a rise above here creating a higher high.
On the flip side, a break below 1.24 could open the door to support at 1.2270, the February 14 high, before exposing 1.2170 the 50 & 100 sma.
DAX rises after China GDP beats, German ZEW economic sentiment in focus
- China’s Q1 GDP rises 4.5% YoY
- German ZEW German economic sentiment
- DAX rises towards yearly high
The DAX is rising after modest losses yesterday as investors cheer stronger-than-expected growth in China, and as investors look ahead to German ZEW economic sentiment data.
China’s Q1 GDP rose to 4.5% year on year, ahead of the 4% forecast as the economy rebounded post-Covid restrictions. Retail sales jumped over 10% in March, smashing forecasts, but industrial production rose a less-than-expected 3.9% YoY. While the data is encouraging, concerns over uneven growth have held the rally back.
Attention is now turning to German ZEW economic sentiment data, which is forecast to rise to 15.3 in April, up from 13. Improving economic sentiment could help boost the index.
Where next for the DAX?
The DAX trades within a multi-month rising channel, reaching a yearly high yesterday at 15905. The RSI is in bullish territory, which, combined with the 20 sma, rising above the 50 sma in a bullish signal, keeps buyers hopeful of further gains.
Buyers will look for a rise above 15905 to fresh yearly highs and to 16000 the round number. Beyond here the January 2022 high comes into play at 16285.
On the flipside, a break below 15700 the March high, exposes the 20 & 50 sma at 15450 and the lower band of the rising channel, towards 15000.
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