- GBP/USD went into a consolidation phase after failing to hold above 1.2700 on Thursday.
- 1.2650 aligns as a key near-term technical support for the pair.
- Nonfarm Payrolls in the US are forecast to rise by 170,000 in December.
GBP/USD gathered bullish momentum and climbed to 1.2730 in the European session on Thursday but reversed its direction in the second half of the day to close virtually unchanged below 1.2700. The pair stays relatively quiet and fluctuates in a narrow band early Friday.
The data from the US showed that employment in the private sector rose by 164,000 in December. This reading surpassed the market expectation of 115,000 by a wide margin. Additionally, the weekly Initial Jobless Claims came in at 202,000 in the week ending December 30, down from 220,000 in the previous week. The benchmark 10-year US Treasury bond yield climbed above 4% following these data and helped the US Dollar (USD) find a foothold in the second half of the day on Thursday.
The US Bureau of Labor Statistics will release the December jobs report on Friday. Nonfarm Payrolls (NFP) are forecast to rise by 170,000 and the Unemployment Rate is expected to tick up to 3.8% from 3.7% in November.
In case there is an increase of 200,000 or more in NFP, investors could scale back March rate-cut bets and provide a boost to the USD, causing GBP/USD to push lower. On the other hand, a reading close to 100,000 could reaffirm a Federal Reserve (Fed) policy pivot and trigger a decline in US yields. In this scenario, GBP/USD could gain traction alongside US stocks.
GBP/USD Technical Analysis
1.2650 (200-period Simple Moving Average (SMA), Fibonacci 23.6% retracement of the latest uptrend) aligns as key support for GBP/USD. In case the pair falls below that level and starts using it as resistance, technical sellers could take action and open the door for an extended slide toward 1.2600 (psychological level, static level) and 1.2550 (Fibonacci 38.2% retracement).
On the upside, first resistance is located at 1.2690-1.2700 (100-period SMA, psychological level) before 1.2740 (lower limit of the broken ascending regression channel) and 1.2800 (psychological level, static level).
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