GBP/USD Forecast: Vulnerable to more falls after the Carney crash, ahead of the NFP

GBP/USD has been licking its wounds from Carney's dovish words.
US Non-Farm Payrolls and Brexit speculation are in focus.
Friday's four-hour chart is pointing to further falls.

Yohay Elam FXStreet

Is the Bank of England on course to cut rates in the near future? The pound has been struggling to recover from the dovish hints from the bank.

Mark Carney, Governor of the Bank of England, said on Thursday that he may react "promptly" to economic weakness and that the bank has the equivalent of 250 basis points of ammunition to use in case of a downturn. Bond markets reflect higher odds of a rate reduction in the spring.

The BOE rarely had any impact on sterling in recent months, as UK politics were left, right, and center. However, after the Conservatives' landslide win, there is no more drama in parliament and economics have their say. Carney's speech came while the House of Commons cleared the Brexit Withdrawal Bill. It will now be debated in the House of Lords. which is unlikely to cause any significant delays.

The UK is on course to leave the EU at the end of the month and speculation about future EU-UK relations is rife. Prime Minister Boris Johnson remains optimistic about reaching an accord by year-end, while Brussels has its doubts.

With calm in Mid-East tensions, broader markets also focus on economics rather than politics. The all-important US Non-Farm Payrolls is set to show an increase of 164,000 jobs and an annual rise of 3.1% in wages. Real estimates may be higher after robust US figures earlier this week.

See:

Non-Farm Payrolls Preview: All signs are go
Nonfarm Payrolls Preview: New year, old data

Expectations may be too high – leaving ample room for a disappointment. The event triggers high volatility.

Overall, the US NFP and Brexit speculation are set to move pound/dollar.

GBP/USD Technical Analysis

Cable remains under pressure after losing the critical 1.3080 level – the confluence of the 100 Simple Moving Average on the four-hour chart and a support line from earlier this week. Momentum remains to the downside and the 50 and 100 SMAs also cap the pair.

Support awaits at 1.3050, the early January high. Next, we find the fresh 2020 low of 1.3010. It is followed by 1.2985 and 1.2950.

This week's highs of 1.3125, 1.3150, and 1.3215 all serve as resistance lines.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

The Federal Reserve (Fed) faces a renewed inflation challenge after two consecutive reports showed price pressure intensifying across the US economy. September's Consumer Price Index (CPI) confirmed accelerating consumer inflation, while the Producer Price Index (PPI) revealed an even sharper rise in business costs. Behind both reports lies a common factor: energy prices.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.