Today's labour market data exacerbated the short term selling pressures on the GBPUSD, driving the price lower. The broader market sentiment on the pair remains ostensibly bearish.
British headline unemployment shrunk more than initially forecasted, reaching its lowest level since September 2020. The welcoming labour market numbers are encouraging for the recuperating British economy, which is still struggling with the Delta variant of coronavirus.
Even still, the news did not help the depreciating pound. As can be seen on the 4H chart above, the greenback extended its advance against the sterling in the early hours of today's session.
The price action of the GBPUSD remains concentrated within the boundaries of a descending channel following a temporary fakeout last week. The latter was caused by the latest U.S. inflation numbers.
Bearish pressure keeps mounting on the pair as the price action continues developing a massive 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. It is currently in the process of establishing the final impulse leg (4-5), which could reach as low as the 61.8 per cent Fibonacci retracement level at 1.37281.
The mounting bearish pressure is underpinned by the fact that last week's pullback was terminated below the 100-day MA (in blue), the 50-day MA (in green), and the 23.6 per cent Fibonacci retracement level at 1.38864.
Afterwards, the price action was able to break down below the 150-day MA (in orange), the 38.2 per cent Fibonacci at 1.38259, and return back within the boundaries of the descending channel.
According to the July labour force survey, published by the Office for National Statistics, headline unemployment shrunk to 4.7 per cent from the 4.8 per cent that was recorded a month prior.
The consensus forecasts were anticipating headline unemployment to remain flat at 4.8 per cent, which underpins a moderately faster-than-expected pace of economic recovery.
The British labour market has been strengthening throughout the entire 2021.