GBP/USD Ready to Restart with NFP?

6. Okt. 2023

The GBP/USD exchange rate is showing a slight decline around 1.2180 during the Asian session on Friday, indicating a retracement from recent gains. However, the US Dollar (USD) is correcting following the decrease in US bond yields, providing upward support for the exchange rate. A key support level is at 1.2100, represented by the 20-period Simple Moving Average and the upper limit of a previously broken descending regression channel. If 1,2100 remains intact, buyers may remain interested. The next resistance levels are expected at 1.2160, 1.2200, and 1.2250. However, if 1,2100 were to give way, sellers could push the exchange rate towards 1.2060 and 1.2000. During the Asian session on Thursday, GBP/USD surpassed 1,2150 but later lost momentum, yet managed to stabilize above 1,2100 during the European session. Improved risk sentiment made it challenging for the USD to find demand in the latter half of Wednesday, contributing to the recovery of GBP/USD. Disappointing US labor market data showed a modest increase in private sector employment in September, negatively impacting the USD. The UK's FTSE 100 index saw a modest growth on Thursday, while US stock index futures indicated a mixed risk sentiment. The USD's downward correction is likely to remain limited unless major Wall Street indexes open higher and build on Wednesday's gains. Market participants will closely monitor the weekly Initial Jobless Claims data ahead of Friday's September jobs report. This week's employment-related data failed to provide a clear picture of labor market conditions. The sharp increase in JOLTS job openings highlighted strong labor demand, but ADP's report revealed a loss of momentum in private sector hiring. Hence, an Initial Jobless Claims reading below 200,000 could boost the USD, while a significant increase in first-time applications for unemployment benefits could have a negative impact on the USD's valuation. A brief reflection on the dollar and the pound before NFP: currently, my short-term view remains short until the demand zone at the 1.2150 level, where I expect a bounce for a new long position. Let me know what you think; happy trading to all from Nicola, the CEO of Forex48 Trading Academy.