GBP/USD Forecast: Eyes on US data for next directional clue

GBP/USD holds steady at around 1.2750 following Thursday's rebound.
Nonfarm Payrolls in the US are forecast to rise 225,000 in June.
The pair needs to clear 1.2770 to attract additional buyers.

Eren Sengezer FXStreet

GBP/USD retreated from the two-week high it set at 1.2782 on Thursday but stabilized near 1.2750 on the last trading day of the week. The June jobs report from the US could significantly impact the US Dollar's (USD) valuation and drive the pair's action ahead of the weekend.

After the data from the US showed that the service sector's economic activity expanded at a stronger pace than expected in and that private sector payrolls rose nearly 500,000 in June, the USD started to gather strength against its peers. As a result, GBP/USD declined sharply and erased nearly 100 pips, touching a daily low below 1.2700 in the American session.

Pound Sterling, however, managed to stay resilient against the USD with the 10-year UK gilt yield rising to its highest level since October 2008 at 4.7%. Global bond yields stay relatively quiet early Friday, making it difficult for the pair to find direction.

The US Bureau of Labor Statistics is expected to report an increase of 225,000 in Nonfarm Payrolls (NFP) in June. The Federal Reserve (Fed) is widely anticipated to raise its policy rate by 25 basis points in July. Investors are not yet convinced about the US central bank opting for one more hike after July. A smaller-than-forecast increase in NFP could go against hawkish Fed expectations and weigh on the USD.

Investors will also pay close attention to the action in Wall Street's main indexes. Even if a disappointing NFP print hurts the USD, a risk-averse market atmosphere on growing recession fears could limit the currency's losses.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) on the four-hour chart holds above 50 and GBP/USD trades above the 100-period Simple Moving Average (SMA) currently located at 1.2725, reflecting the lack of seller interest.

Below 1.2725, 1.2700 (Fibonacci 23.6% retracement of the latest uptrend) aligns as key support ahead of 1.2650 (static level) and 1.2630 (Fibonacci 38.2% retracement).

On the upside, static resistance seems to have formed at 1.2770 before 1.2800 (psychological level) and 1.2830 (the end-point of the latest uptrend).

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD treads water around 1.1900

EUR/USD edges a tad lower around the 1.1900 area, coming under mild pressure despite the US Dollar keeps the offered stance on turnaround Tuesday. On the US data front, December Retail Sales fell short of expectations, while the ADP four week average printed at 6.5K.

GBP/USD looks weak near 1.3670

GBP/USD trades on the back foot around the 1.3670 region on Tuesday. Cable’s modest retracement also comes in tandem with the decent decline in the Greenback. Moving forward, the US NFP and CPI data in combination with key UK releases should kee the quid under scrutiny in the next few days.

Gold the battle of wills continues with bulls not ready to give up

Gold comes under marked selling pressure on Tuesday, giving back part of its recent two day advance and threatening to challenge the key $5,000 mark per troy ounce. The yellow metal’s correction follows a better tone in the risk complex, a lower Greenback and shrinking US Treasuty yields.

AI Crypto Update: BankrCoin, Pippin surge as sector market cap steadies above $12B

The Artificial Intelligence (AI) segment is largely on the back foot with major coins such as Bittensor (TAO) and Internet Computer (ICP) extending losses amid a sticky risk-off sentiment.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.