• GBP/USD loses bullish momentum after testing key resistance area.
  • US Dollar could struggle to gather strength amid dovish Fed bets.
  • Market participants will pay close attention to US employment data.

GBP/USD lost traction, retreating toward 1.2400, after having closed the first three trading days of the week in positive territory. 1.2440/50 area aligns as key resistance and buyers could take action once that level is confirmed as support.

GBP/USD stayed under bearish pressure and dropped to the 1.2350 area in the first half of the day on Wednesday as safe-haven flows provided a boost to the US Dollar (USD). In the late American session, however, the USD lost its strength on improving risk mood after the US House of Representatives passed a bill to suspend the debt ceiling through January 1, 2025. Moreover, dovish comments from Federal Reserve (Fed) officials put additional weight on the USD's shoulders.

Philadelphia Fed President Patrick Harker and Fed Governor Philip Jefferson both voiced their willingness to skip a rate hike in June. The CME Group FedWatch Tool's probability for a 25 basis points rate increase at the upcoming policy meeting climbed above 60% following these comments from nearly 30% earlier in the day.

Nevertheless, the USD stays resilient against its peers early Thursday and limits GBP/USD's upside. The risk-positive market environment and the market pricing of the Fed's rate outlook, however, suggests that the USD could have a difficult time outperforming its major rivals.

In the early American session, the Automatic Data Processing (ADP) will release the private sector employment report. Markets expect an increase of 170,000 in May following the impressive 229,000 growth recorded in April. A weaker-than-expected reading should weigh on the USD in the near term and help GBP/USD stretch higher and vice versa. The US economic docket will also feature the ISM Manufacturing PMI survey for May. The headline PMI is forecast to stay below 50 and show an ongoing contraction in the sector's activity. This data is unlikely to support the USD unless it swings back above 50.

GBP/USD Technical Analysis

GBP/USD continues to trade outside the descending regression channel and the Relative Strength Index (RSI) indicator on the four-hour chart stays above 50, reflecting the bullish bias in the near term. On the upside, 1.2440/50 (100-period Simple Moving Average (SMA), Fibonacci 23.6% retracement of the latest uptrend) forms stiff resistance area. In case buyers flip that level into support, additional gains toward 1.2480 (200-period SMA) and 1.2500 (psychological level, static level) could be witnessed.

On the downside, 1.2400 (psychological level, static level) aligns as interim support ahead of 1.2380 (20-period SMA, 50-period SMA) and 1.2350 (upper limit of the broken descending channel).

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


Recommended Content

Editors’ Picks

EUR/USD holds positive ground above 1.0750 ahead of Eurozone PMI, PPI data

EUR/USD holds positive ground above 1.0750 ahead of Eurozone PMI, PPI data

EUR/USD trades in positive territory for the fourth consecutive day near 1.0765 during the early Monday. The softer US Dollar provides some support to the major pair. Traders await the HCOB Purchasing Managers’ Index (PMI) data from Germany and the Eurozone, along with the Eurozone PPI.

EUR/USD News

GBP/USD rises to near 1.2550 due to dovish sentiment surrounding Fed

GBP/USD rises to near 1.2550 due to dovish sentiment surrounding Fed

GBP/USD continues its winning streak for the fourth consecutive day, trading around 1.2550 during the Asian trading hours on Monday. The appreciation of the pair could be attributed to the recalibrated expectations for the Fed's interest rate cuts in 2024 following the release of lower-than-expected US jobs data.

GBP/USD News

Gold price rebounds on downbeat NFP data, softer US Dollar

Gold price rebounds on downbeat NFP data, softer US Dollar

Gold price snaps the two-day losing streak during the Asian session on Monday. The weaker-than-expected US employment reports have boosted the odds of a September rate cut from the US Federal Reserve. This, in turn, has dragged the US Dollar lower and lifted the USD-denominated gold. 

Gold News

Bitcoin Cash could become a Cardano partnerchain as 66% of 11.3K voters say “Aye”

Bitcoin Cash could become a Cardano partnerchain as 66% of 11.3K voters say “Aye”

Bitcoin Cash is the current mania in the Cardano ecosystem following a proposal by the network’s executive inviting the public to vote on X, about a possible integration.

Read more

Week ahead: BoE and RBA decisions headline a calm week

Week ahead: BoE and RBA decisions headline a calm week

Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.

Read more

Majors

Cryptocurrencies

Signatures