GBP/USD Price Analysis: Hangs in the balance of NFP, breakout imminent

GBP/USD bulls seeking a test of the daily highs but awaits NFP.
Bears will be keen on a deeper correction on a positive NFP print.

Ross J Burland FXStreet

Following the Bank of England event earlier today, GBP/USD has held onto a modest gain.

GBP/USD refreshes daily tops post-BoE, retreats a bit thereafter

Cable rose as high as $1.3949 after the BoE decision but was unable to break the resistance needed for an upside continuation in the daily time frame.

The following illustrates the market structure of both the DXY and GBP/USD.

The current trajectory in the US dollar is higher for prospects of a deeper correction into the 61.8% Fibonacci retracement level next to prior lows in the 92.50 area.

This will be depending on the outcome of Friday's Nonfarm Payrolls event. In respect of this, there is potential for a disappointment in contrast to the current hawkish narrative from the Federal Reserve.

In such an instance this would be expected to weigh heavily on the greenback and potentially send it over the cliff into the abyss to test the 90.50/40s area:

As for cable, it is on the brink of an upside breakout on the daily chart.

The price has consolidated following a slight breach of the 38.2% Fibonacci retracement level and sits in a structure that acts as support that was once resistant mid-July.

Given that, there are upside risks in this period of distribution as bulls might be attracted to buy back into uptrend at a discount following the end of month squaring/profit-taking and the probable reduction in the overall net long sterling positioning.

With that being said, there could be more distribution to come, especially on overwhelming Nonfarm Payrolls that supports the greenback.

Therefore, the downside will come into play and the W formation neckline could be a theme for weeks ahead in the 1.3780s.

Meanwhile, it is worth noting the prospects of a reverse head and shoulders:

The reverse head & shoulders is a bullish pattern on a break of neckline resistance.

With that being said, the W-formation could be brewing and any move to the upside could be in jeopardy.

M & W formations are reversion structures that have a high completion rate with price usually drawn back into the neckline of the pattern.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD extends recovery, trades above 1.3200

GBP/USD holds on to modest gains above 1.3200 on Friday, building on gains seen in the previous day. Still, Cable struggles to build on its recovery as cautious market sentiment keeps investors focused on the US-Iran conflict and ongoing volatility in global technology stocks.

EUR/USD pops to daily highs near 1.1420

EUR/USD extends Thursday's recovery and climbs past the 1.1400 yardstick at the end of the week. The pair’s recovery comes as the US Dollar remains on the back foot, while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold advances to two-day highs, targets $4,100

Gold trades in a tight range above $4,000 per troy ounce on Friday, adding to the recent recovery. The precious metal, however, finds it difficult to attract fresh buyers as expectations for a hawkish Fed continue to strengthen.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

The Mag 7 trade is ending – The AI cash-flow divorce is just beginning

The AI boom is not weakening. The market is simply becoming less willing to reward companies for writing ever-larger infrastructure cheques without a clearer cash-return timetable. Microsoft, Amazon, Alphabet and Meta are becoming the financing arm of the AI cycle, while chips, memory, networking and power infrastructure increasingly look like the early cash beneficiaries.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.