GBP/USD, DAX Forecast: Two trades to watch

GBP/USD rises above 1.3050 after mixed jobs data

UK unemployment unexpectedly fell to 4%
Wage growth eased to 4.9% from 5.1%
USD rises to 2 month high versus its major peers
GBP/USD steadies above 1.3050

The pound is rising after UK unemployment unexpectedly slipped to 4%, down from 4.1%, and as wage growth eased to 4.9%, down from 5.1%, in line with analysts' expectations.

The data adds to evidence that pay pressures in the economy are easing and also supports recent industry surveys suggesting that employers had put hiring on hold ahead of this month's budget as they look for more certainty over government policy on tax and spending.

The data also points to an ongoing decline in job vacancies, which fell over the past quarter to 841,000, which is just above pre-pandemic levels.

The data support the Bank of England's decision to continue cutting interest rates in November after reducing them by 25 basis points in August.

Policymakers have said they want to see clear evidence that pay pressures, which had been driving service sector inflation, are easing before they cut interest rates again.

Meanwhile, the US dollar is easing, although it continues to hover around a 2.5-month high, supported by the view that the Federal Reserve will cut interest rates at a slower pace than initially expected.

Fed governor Waller central bank should be more cautious about cutting rates ahead. There is no high-impacting U.S. economic data due to be released today.

GBP/USD forecast – technical analysis

GBP/USD continues to trade below its 50 SMA at 1.031, which acts as near-term resistance. Buyers need to break above here and last week’s high at 1.3135 to extend gains towards 1.32 and 1.3260.

Sellers will look to take out last week’s low of 1.3220 to test 1.30. Sellers must take out the key 1.30 support to create a lower low and expose the 100 SMA at 1.2950 and the rising trendline support at 1.29.

DAX rises to fresh record highs

Optimism over rate cuts boosts the DAX
German ZEW economic sentiment is expected to improve
DAX rises towards 20k

The DAX opened higher, reaching a record level after staying at a record high yesterday and following another record close on Wall Street.

Optimism about a lower interest rate environment is helping to boost stocks higher. The ECB is expected to cut interest rates by 25 basis points later this week, marking the third rate cut since June. Meanwhile, the Federal Reserve is also expected to continue cutting interest rates, albeit at a slower pace than initially expected. Still, the prospect of lower borrowing costs is supportive of stocks and sentiment.

Meanwhile, Chinese stimulus has been another supporting factor although there are some questions over whether the stimulus announced will be sufficient to lift Chinese GDP back to the 5% target. Over the weekend, the Finance Ministry was underwhelmed with the latest stimulus announcement, leaving out key facts such as the size and timing of the measures.

Today, attention is back on the eurozone economic calendar, with ZEW economic sentiment expected to increase to 10 in October from 3.6. Improving sentiment towards the German economy could lift the DAX higher.

DAX forecast – technical analysis

The DAX has risen above the 19495 September high, breaking to fresh record levels. With blue skies above, buyers will look to 20,000 on the psychological level.

Immediate support is at 19,495, and below here, 19,000 comes into focus, with a break below here creating a lower low.

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