- Sterling lacks directional strength ahead of Friday's NFP risk event.
- Limited UK data for Friday's London window leaves plenty of room for market sentiment to set the tone.
The GBP/USD is heading lower ahead of the London market session, and the pair is testing back into 1.3260 with the US Non-Farm Payrolls on the horizon.
Market sentiment couldn't decide what to do with itself this week, with risk assets slumping early in the week following Italy's government spoil that looked set to send Italy heading back to the election polls, but fears resolved themselves when it appeared that Italy may avert a re-election.
Then US President Donald Trump cooled off a risk recovery on Thursday when it was announced that the US would impose their months-old steel and aluminum tariffs on Canada, Mexico, and the EU, three of the US' closest allies and biggest trading partners. Markets recoiled at the news as traders brace for a ramping up of the early stages of a global trade war, with all three of the affected bodies stating their intentions to retaliate with similar tariffs of their own.
With market sentiment souring, the Sterling heads into Friday with only Markit Manufacturing PMIs for May (forecast 53.5, prev. 53.9) on the docket at 08:30 GMT, Followed by the US NFP report at 12:30 GMT. The NFP is expected to come in at 188 thousand, a clip higher than the previous reading of 164 thousand, and y/y Average Hourly Earnings for May are expected to tick up slightly to 2.7%, from 2.6%.
GBP/USD levels to watch
The Sterling's attempts to form up a bullish technical correction appear to be fizzling out quickly, and as FXStreet Chief Analyst Valeria Bednarik noted, "the short-term picture for the pair is neutral, as the pair is hovering around a flat 20 SMA, while technical indicators diverge from each other the Momentum heading higher above its mid-line, and the RSI heads lower around 45. The risk remains leaned to the downside despite the ongoing absence of directional strength, with a break now below 1.3245 required to confirm a new leg south."
Support levels: 1.3245 1.3200 1.3160
Resistance levels: 1.3315 1.3360 1.3400
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.