GBP/USD Forecast: bearish trend set to resume, UK PMI/US NFP in focus

Haresh Menghani FXStreet

On Thursday, the GBP/USD pair built on this week's recovery move from 6-month lows and jumped to fresh weekly tops, around mid-1.3300s. Bulls, however, once again struggled to sustain a move beyond the 1.3300 handle, with a goodish US Dollar rebound prompting some fresh selling at higher levels. Yesterday's mostly positive US economic data, coupled with resurgent US Treasury bond yields helped the greenback to recover early lost ground and exerted some fresh downward pressure on the major.

Meanwhile, reviving trade war fears, led by the Trump administration's decision to impose steel and aluminium tariffs on Canada, Mexico, and the EU, prompted a fresh wave of global risk-aversion trade and benefitted the greenback's safe-haven appeal against its British counterpart. The pair has now reversed nearly 100-pips from overnight swing high and dropped back closer to yearly lows as investors start repositioning for today's key data risk - the release of US monthly jobs report. Ahead of the keenly watched NFP print, the UK manufacturing PMI might help traders grab some short-term trading opportunities during the European session.

The pair on Thursday did attempt a move beyond a short-term descending trend-channel formation on the hourly chart but the price action now seems to suggest that the bearish pressure might still far from over. A follow-through weakness back below 1.3235-30 region would signal resumption of the downward trajectory and turn the pair vulnerable to break below the 1.3200 handle and head towards testing the trend-channel support, currently near the 1.3140 region.

On the upside, the 1.3290-1.3300 region now becomes immediate strong hurdle and is followed by the 1.3335-40 supply zone. A convincing breakthrough the mentioned barriers should negate the negative outlook and trigger a short-covering bounce back towards the 1.3400 handle en-route its next major resistance near the 1.3460-65 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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