GBP/USD Forecast: Non-Farm Payrolls set to break the tie between the BOE and Boris' lockdown decision

A pint at the pub? British newspapers seem to spread hope for a substantial easing of the lockdown, yet watering holes will likely remain shuttered for longer. Ministers have urged caution as the COVID-19 curve flattened but has not fallen enough. Prime Minister Boris Johnson will lay out the plans only on Sunday evening and these may weigh on the pound.

Sterling has been lifted by the Bank of England's commitment to do more – with two members already voting to add more Quantitative Easing on Thursday. Andrew Bailey, the BOE Governor, said that expanding the bond-buying scheme in June is undoubtedly an option, and it significantly depends on economic conditions. 

See BOE Quick Analysis: More QE seems only a matter of time, GBP/USD has room to rise

GBP/USD has also been on the rise amid an improved market mood, as US and Chinese negotiators were in touch and agreed that progress has been made in implementing the trade deal. A drop in tensions between the world's largest economies has weighed on the safe-haven dollar.

Non-Farm Payrolls

Will the greenback see demand when the US reports horrible Non-Farm Payrolls? Markets are probably pricing in catastrophic figures – an unemployment rate of 14% and a loss of no fewer than 22 million jobs. A disproportionate shedding of lower-paying jobs that cannot be performed remotely may skew the wage data to the upside.

Apart from the headline figures, it will be interesting to see if lost positions are concentrated in leisure jobs that could bounce back or spread across all sectors – suggesting long-term damage. Economists' range of estimates is extraordinarily wide amid the historic event. The figures will surpass the worst of the Great Recession. 

See:

• Non-Farm Payrolls Preview: Emotions or facts for the markets
• Nonfarm Payrolls Preview: Outrageous employment collapse priced in?

A figure closer to -30 million may send stocks tumbling and the dollar higher, while better than expected statistics could weigh on the greenback. 

The level of uncertainty is unprecedented and may trigger choppy trading. 

GBP/USD Technical Analysis

Pound/dollar is battling with the 200-day Simple Moving Average on the four-hour chart and trades below the 100 and 200 SMAs. Momentum is to the downside. Bears remain in the lead but do not have full control. 

Support is at 1.2310, a low point on Thursday. The swing low of 1.2270 is the next line to watch and is closely followed by 1.2250, a trough from late April. 

Resistance awaits at 1.2420, which was a peak on Thursday and converges with the 100 SMA. It is followed by 1.2450, which capped cable in late April. NExt, 1.2480, 1.2520, and 1.2575 await GBP/USD.