- GBP/USD has gained traction early Friday following two-day decline.
- Brexit headlines seem to be helping the British pound stay resilient.
- The pair could reverse its direction on a strong US jobs report.
GBP/USD has gained traction and climbed above 1.1200 early Friday after having erased all of its weekly gains in a two-day slump. The pair is trading in between key technical levels and the market reaction to the US September jobs report could reveal the next short-term direction for the pair.
Hawkish comments from Fed officials and the souring market allowed the dollar to preserve its strength on Thursday and forced GBP/USD to lose more than 1% for the second straight day. Fed Governor Christopher Waller reiterated that inflation is far from the US central bank's target and added that they need to use policy aggressively to bring it down. Commenting on the inflation outlook, newly appointed Fed Governor Lisa Cook said that they need to keep the restrictive policy until they are convinced that inflation is firmly on the path to 2%.
On a GBP-positive note, Irish Foreign Minister Simon Coveney said on Friday that he had a very good meeting with British Foreign Secretary Cleverly on Northern Ireland Protocol on Thursday. "We do not think we should get carried away with warm language but the new UK government is up for serious discussion," Coveney added.
Nevertheless, investors are unlikely to put too much weight on Brexit developments at this stage and the Nonfarm Payroll's data should dominate the pair's action in the second half of the day.
Markets expect NFP to rise by 250,000 in September. A stronger-than-forecast growth in NFP could provide a boost to the dollar and trigger another selloff in US stocks. In that scenario, the pair is likely to turn south and end the week on a bearish note. On the other hand, an NFP reading of 200K or lower could cause the greenback to suffer heavy losses against its major rivals.
Nonfarm Payrolls Preview: Five scenarios for trading King Dollar as markets plead for pain.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways near 50, reflecting the pair's indecisiveness. On the upside, 1.1270 (Fibonacci 23.6% retracement of the latest uptrend) aligns as initial resistance before 1.1300 (20-period SMA) and 1.1400 (200-period SMA).
Supports are located at 1.1130 (Fibonacci 38.2% retracement, 50-period SMA), 1.1100 (psychological level) and 1.1030 (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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD remains pressured below 1.0800 on renewed USD strength
EUR/USD stays under pressure and declines toward 1.0750 following Thursday's recovery. A renewed US Dollar uptick and a cautious mood weigh on the pair, as traders digest the Trump win and the Federal Reserve's monetary policy announcements.
GBP/USD holds lower ground near 1.2950 amid tepid risk sentiment
GBP/USD trades in negative territory at around 1.2950 in the second half of the day on Friday. The emergence of dip-buying in the US Dollar and a tepid risk tone undermine the pair. The BoE’s cautious rate cut could check the pair's downside as traders comments from central bankers.
Gold fluctuates below $2,700 amid stronger USD, positive risk tone
Gold trades below $2,700 in the early American session on Friday and is pressured by a combination of factors. Hopes that Trump's policies would spur economic growth and inflation, to a larger extent, overshadow the Fed's dovish outlook, which, in turn, helps revive the USD demand.
Week ahead – US CPI to shift market focus back to data after Trump shock
After Trump comeback, normality to return to markets with US CPI. GDP data from UK and Japan to also be important. But volatility to likely persist as markets assess impact of Trump.
October’s US CPI rates to be the next big test for the greenback
With the US elections being over, Trump getting elected and the Fed having released its interest rate decision, we take a look at what next week has in store for the markets. On the monetary front a number of policymakers from various central banks are scheduled to speak at some point or the other.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.