The Pound crashes back towards the 1.3100 level after the release of a mixed U.K labor report. The report showed an increase in Britain's employment to a record high of 75.7% but a decrease in wage growth from 2.8% to 2.7%. Following the release, investors began to digest the idea of a lower inflation going forward given that wage growth is declining. Expectations for lower inflation means that the chance of a rate hike in August is decreasing.
The Pound's decline was further amplified after Fed Powell boosted the greenback by firmly stating that the Federal Reserve will continue to hike rates every three months. Fed Powell cited a “strong labor market, inflation close to the Fed's objective and the risks to the outlook roughly balanced” as sufficient reasons to be hawkish and optimistic.
The Pound failed to reverse the general downtrend by remaining below the 200-period moving average. The pair also formed a bearish, reversal double top pattern signaling the end of the short term bullish momentum. A break below the 1.30944 level will expose the next support level at 1.30300 which also coincides with the 1.27 Fibonacci extension.
Support: 1.30944 1.30300
Resistance: 1.31540 1.32100