GBP/USD: Any recovery post-NFP to prove a selling opportunity

GBP/USD has been extending its falls amid a mix of dollar strength and virus concerns. US Nonfarm Payrolls may trigger a temporary dollar correction, providing a fresh selling opportunity, according to FXStreet’s Analyst Yohay Elam.

Bounce before a plunge to 1.3670?

“In the UK, the greater worry is that the reopening now planned for July 19 could be delayed again – or perhaps watered down. The Delta variant continues spreading quickly, and the consequent increase in hospitalizations causes worries. Additional time would help Britain vaccinate more people. More broadly, concerns of a new winter wave also weigh on economic prospects.”

“The Fed and investors now have their eyes fixed on June's all-important Nonfarm Payrolls. The economic calendar is pointing to an increase of 690,000 jobs, better than May's 559,000 and alongside a drop in the Unemployment Rate to 5.6%.” 

“All in all, there is room for disappointment in Nonfarm Payrolls, resulting in an upswing for GBP/USD. Nevertheless, the basic fundamentals have not changed – the US economy is still growing quickly and the Fed is set to withdraw some of its support.”

“Immediate support is at the fresh low of 1.3743, followed by 1.3720, a swing low from April. The critical level to watch is 1.3670, which was a double-bottom back in April and also the lowest since February.” 

“Resistance is at 1.3785, a trough from mid-June, followed by 1.3835, a level that capped a recovery attempt earlier this week. Further above, 1.3875 and 1.3940 await GBP/USD.”