Fundamental Overview
The USD weakened across the board following soft US Jobless Claims and ISM Services PMI reports. Overall, the data didn’t change much in terms of interest rates expectations, but it reinforced the view that the Fed is going to deliver at least two rate cuts by the end of the year.
The GBP, on the other hand, has been under pressure mainly due to the US Dollar strength last week which has been influenced more by quarter-end flows rather than something fundamental. This week, the US Dollar is back on the defensive as the market continues to trade the soft-landing narrative.
Moreover, we had the UK elections yesterday and as widely expected, the Labour party achieved a landslide victory. This outcome was already priced in and it didn't impact the Pound that much.
GBPUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that GBPUSD eventually bounced from the support at 1.2635 and extended the rally following soft US data on Wednesday. The price is now getting close to the key 1.28 resistance.
That’s where we can expect the sellers to step in with a defined risk above the level to position for a drop back into the 1.2634 support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the 1.29 handle next.
GBPUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we got a pullback recently into the 1.2740 level where the buyers piled in to extend the rally into the 1.28 resistance. Today, a lot will depend on the US NFP report.
If we get bad data, the market might go into risk-off and we will likely see the sellers piling in aggressively at every break lower. The buyers will want to see a good or benign report which could lead to a dip-buying opportunity on a pullback into the 1.2740 level.
GBPUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now trading right in the middle of the two key levels, so from a risk management perspective, there’s not much to do here. The red lines define the average daily range for today.
Upcoming Catalysts
Today we conclude the week with the US NFP report where the data is expected to show 190K jobs added in June and the Unemployment Rate to remain unchanged at 4.0%.
