GBP/USD Forecast: Pound Sterling faces stiff resistance at 1.2800 ahead of US NFP

  • GBP/USD continues to move sideways near 1.2800 early Friday. 
  • May jobs report from the US could drive the pair's action heading into the weekend.
  • Pound Sterling needs to flip 1.2800 into support to attract buyers.

GBP/USD failed to make a decisive move in either direction and closed the day virtually unchanged on Thursday. The pair continues to fluctuate in a narrow channel slightly below 1.2800 early Friday as investors stay on the sidelines while waiting for the May jobs report from the US.

British Pound PRICE This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Canadian Dollar.

USD   -0.35% -0.35% -1.20% 0.37% -0.18% -0.87% -1.54%
EUR 0.35%   0.03% -0.83% 0.72% 0.04% -0.53% -1.21%
GBP 0.35% -0.03%   -0.79% 0.69% 0.08% -0.62% -1.24%
JPY 1.20% 0.83% 0.79%   1.55% 1.08% 0.46% -0.18%
CAD -0.37% -0.72% -0.69% -1.55%   -0.58% -1.24% -1.92%
AUD 0.18% -0.04% -0.08% -1.08% 0.58%   -0.58% -1.27%
NZD 0.87% 0.53% 0.62% -0.46% 1.24% 0.58%   -0.72%
CHF 1.54% 1.21% 1.24% 0.18% 1.92% 1.27% 0.72%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

The US Dollar (USD) struggled to find demand on Thursday but the cautious market stance helped it limit its losses, not allowing GBP/USD to gather bullish momentum. Early Friday, US stock index futures trade little changed, reflecting a neutral risk mood.

The US Bureau of Labor Statistics will publish labor market data for May later in the day. Nonfarm Payrolls (NFP) are forecast to rise 185,000 following April's disappointing 175,000 increase. Following this week's mixed macroeconomic data releases from the US, the probability of the Federal Reserve leaving its policy rate unchanged in September declined to 32% from 45%.

A weak NFP print of 150,000, or lower, could point to loosening conditions in the labor market and weigh on the USD, helping GBP/USD gain traction in the American session. On the flip side, an upbeat NFP reading of above-200,000 could provide a boost to the USD and force the pair to stretch lower.

GBP/USD Technical Analysis

The mid-point of the ascending regression channel aligns as key resistance at around 1.2800. In case the pair rises above that level and starts using it as support, technical buyers could show interest. In this scenario, 1.2850 (static level) could act as interim resistance before 1.2900 (upper limit of the ascending channel).

On the downside, the 50-period Simple Moving Average (SMA) on the 4-hour chart could be seen as first support before 1.2730 (lower limit of the ascending channel, 100-period SMA) and 1.2700 (static level, psychological level). 

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews ​and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Last release: Fri May 03, 2024 12:30

Frequency: Monthly

Actual: 175K

Consensus: 243K

Previous: 303K

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.


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