GBP/USD: Further upside still in play ahead of US NFP?

The post-UK services PMI-led rally extended into Asia, with the bulls sending GBP/USD to daily highs of 1.3567, before easing slightly to enter a phase of consolidation near 1.3560 region.

GBP/USD: USD continues to remain the key driver

The spot trades firmer and looks to regain the 1.3600 mark, as the US dollar remains on the defensive heading into the US payrolls release. Moreover, Cable also continues to benefit from an unexpected upturn seen in the UK services sector activity, reversing more-than-half the drop fuelled by downbeat manufacturing and construction PMI data from Britain.

Looking ahead, James Chen at Forex.com, noted: “In the run-up to Friday’s jobs release, the US dollar has mostly been selling off sharply since mid-December, due in part to doubts as to whether the US Federal Reserve can keep up with its most recent outlook for three interest rate hikes in 2018, given ongoing concerns over lagging inflation.”

Hence, it remains to be seen whether the US payrolls data offers the much-needed respite to the USD bulls, with the headline figures expected to show +175k job additions while the unemployment rate is seen falling by a one-tenth fall in the unemployment rate to 4.0%, according to Goldman Sachs’ analysts.

GBP/USDTechnical Levels

FXStreet’s Chief Analyst, Valeria Bednarik, wrote: “The 4 hours chart shows that the price is barely holding above a horizontal 20 SMA, while the Momentum indicator pressures its mid-line, and the RSI heads lower around 59, rather suggesting limited buying interest than indicating an upcoming bearish movement. The risk of a bearish extension will increase only on a break below 1.3500 while an acceleration through the daily high should lead to a retest of its weekly high at 1.3612. Support levels: 1.3495 1.3450 1.3410. Resistance levels: 1.3560 1.3610 1.3655.