GBP/USD Forecast: 1.2580 aligns as next bullish target
Premium|Take advantage of 50% OFF on your first month.
Start your subscription and get access to all our original articles.
You have reached your limit of 5 free articles for this month.
Get Premium without limits for only $9.99 for the first month
Access all our articles, insights, and analysts.
UNLOCK OFFER- GBP/USD steadies above 1.2500 in the European morning.
- The near-term technical outlook highlights a buildup of bullish momentum.
- Pound Sterling could target 1.2580 on a disappointing US jobs report.
GBP/USD has been moving sideways in a narrow channel above 1.2500 on Friday, with market participants refraining from making large bets ahead of the all-important May jobs report from the US.
The persistent selling pressure surrounding the US Dollar (USD) fuelled GBP/USD's rally on Thursday and the pair reached its highest level in three weeks near 1.2550. The significant downward revision to the first-quarter Unit Labor Costs data, from 6.3% to 4.2%, triggered a fresh leg of USD sell-off in the American session by feeding into dovish Federal Reserve (Fed) expectations.
The US Bureau of Labor's monthly report is expected to reveal an increase of 190,000 in Nonfarm Payrolls (NFP) in May, down from 253,000 in April. Average Hourly Earnings are forecast to rise 4.4% on a yearly basis, matching the previous month's reading.
In case NFP growth comes in below 150,000, investors could see that as a development reaffirming a pause in the Fed's policy tightening in June and force the USD to stay on the back foot. A no change in wage inflation, or an unexpected decline, should have a similar negative effect on the USD's valuation.
If the labor market report shows a healthy increase in payrolls, near 250,000, market participants could shift their stance and start pricing in a stronger probability for one more 25 basis points Fed rate hike at the next meeting. In that scenario, GBP/USD could turn south ahead of the weekend.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart stays well above 60 and the 20-period SMA on the same chart completed a bullish cross with the 100-period SMA, reflecting the buildup of upside momentum. GBP/USD faces interim resistance at 1.2550 (daily high, static level) ahead of 1.2580 (static level) and 1.2650 (beginning-point of the latest downtrend).
On the downside, 1.2520 (Fibonacci 23.6% retracement) aligns as immediate support before 1.2500 (psychological level) and 1.2480 (200-period SMA, Fibonacci 50% retracement).
- GBP/USD steadies above 1.2500 in the European morning.
- The near-term technical outlook highlights a buildup of bullish momentum.
- Pound Sterling could target 1.2580 on a disappointing US jobs report.
GBP/USD has been moving sideways in a narrow channel above 1.2500 on Friday, with market participants refraining from making large bets ahead of the all-important May jobs report from the US.
The persistent selling pressure surrounding the US Dollar (USD) fuelled GBP/USD's rally on Thursday and the pair reached its highest level in three weeks near 1.2550. The significant downward revision to the first-quarter Unit Labor Costs data, from 6.3% to 4.2%, triggered a fresh leg of USD sell-off in the American session by feeding into dovish Federal Reserve (Fed) expectations.
The US Bureau of Labor's monthly report is expected to reveal an increase of 190,000 in Nonfarm Payrolls (NFP) in May, down from 253,000 in April. Average Hourly Earnings are forecast to rise 4.4% on a yearly basis, matching the previous month's reading.
In case NFP growth comes in below 150,000, investors could see that as a development reaffirming a pause in the Fed's policy tightening in June and force the USD to stay on the back foot. A no change in wage inflation, or an unexpected decline, should have a similar negative effect on the USD's valuation.
If the labor market report shows a healthy increase in payrolls, near 250,000, market participants could shift their stance and start pricing in a stronger probability for one more 25 basis points Fed rate hike at the next meeting. In that scenario, GBP/USD could turn south ahead of the weekend.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart stays well above 60 and the 20-period SMA on the same chart completed a bullish cross with the 100-period SMA, reflecting the buildup of upside momentum. GBP/USD faces interim resistance at 1.2550 (daily high, static level) ahead of 1.2580 (static level) and 1.2650 (beginning-point of the latest downtrend).
On the downside, 1.2520 (Fibonacci 23.6% retracement) aligns as immediate support before 1.2500 (psychological level) and 1.2480 (200-period SMA, Fibonacci 50% retracement).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.