GBP/USD Forecast: Bulls seize control as focus shifts to US NFP report

The GBP/USD pair attracted some dip-buying on Thursday and added to the previous day's strong positive move amid the emergence of some renewed US dollar selling. The positive headlines related to the development of a vaccine for COVID-19 boosted the global risk sentiment and undermined the greenback's relative safe-haven status. It is worth reporting that Biopharmaceutical New Technologies (BioNTech) announced on Wednesday that the COVID-19 vaccine – co-developed with the US pharmaceutical giant Pfizer – has shown potential and triggered a strong immune response in the early stage of human trials.

On the economic data front, the final UK Manufacturing PMI matched the preliminary reading and did little to provide any meaningful impetus to the British pound. From the US, the ADP report showed that private-sector employment rose by 2369K in June as compared to 3000K expected. A slight disappointment was negated by an upward revision of the previous month's reading to +3065K as against -2760 reported earlier. Separately, the US ISM Manufacturing PMI returned to expansion territory and jumped to 52.6 for June vs consensus estimates pointing a rise to 49.5 from 43.1 previous, which remained supportive of the risk-on mood.

The pair rallied around 130 pips intraday and seemed rather unaffected by the lack of progress in the post-Brexit trade talks. The momentum took along some short-term trading stops placed near the 1.2415-20 region and lifted the pair further beyond the key 1.2500 psychological mark, or over one-week tops during the Asian session on Thursday. In the absence of any major market-moving economic releases from the UK, the focus will remain on the closely watched US monthly jobs report. The headline NFP is expected to show that the US economy created 3 million jobs in June and the unemployment rate is seen falling to 12.3% from 13.3% previous.

The data will further offer evidence that the coronavirus-led recession was probably over. However, worries about the ever-rising number of coronavirus cases globally might hold investors from more aggressive risk-taking and remain cautious. This, in turn, might keep a lid on any strong follow-through positive move for the major and any knee-jerk reaction to the release is more likely to be short-lived.

Short-term technical outlook

From a technical perspective, the overnight positive move assisted the pair to break through an important confluence resistance near the 1.2415-20 region. The mentioned barrier comprised of 200-hour SMA and a three-week-old descending trend-line, which should now act as a key pivotal point for short-term traders. Meanwhile, the ongoing momentum seems strong enough to continue lifting the pair further towards the 1.2535-40 supply zone, above which bulls are likely to aim back to reclaim the 1.2600 round-figure mark.

On the flip side, immediate support is now pegged near mid-1.2400s and is closely followed by the 1.2420-15 resistance breakpoint. Failure to defend the mentioned resistance-turned-support might prompt some technical selling and drag the pair back towards the overnight swing lows, around the 1.2360-55 region. Some follow-through selling might turn the pair vulnerable to resume its recent bearish trajectory witnessed over the past three weeks or so.