- Investors are awaiting a crucial US jobs report.
- US data indicated a significant rise in private payrolls last month.
- Investors expect that the BoE will increase rates from 5% to 6.5% by the end of this year.
Today’s GBP/USD outlook is slightly bearish. The pound consolidated on Friday as investors awaited a crucial US jobs report. Furthermore, investors considered the possibility of the Federal Reserve keeping interest rates higher for a longer period. The highly anticipated nonfarm payrolls report, expected to reveal an increase of 225,000 jobs in June, will be released later.
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Notably, data on Thursday indicated a significant rise in private payrolls last month. However, there was a moderate increase in the number of Americans filing for unemployment benefits. This suggested that the labor market remained strong, resulting in elevated US Treasury yields.
Consequently, market speculation grew regarding the Fed’s inclination to further raise rates to control inflation. However, the dollar’s trading range remained limited as market participants remained cautious before the release of the payroll data.
Meanwhile, Thursday, the British pound strengthened to a two-week high of $1.2780. Markets expect an early interest rate hike by the Bank of England, projecting a rate of 6.5% at the beginning of next year compared to the previously expected peak of 6.25%.
Moreover, rate futures revealed a 55% probability that the BoE would increase rates from 5% to 6.5% by the end of this year. The likelihood rises to approximately 80% by March 2024.
GBP/USD key events today
The US will release the all-important nonfarm payroll report today. There will also be an unemployment rate report that will shed light on the state of the labor market. A higher-than-expected reading could push Fed rate hike expectations higher.
GBP/USD technical outlook: Bulls need more energy to crack 1.2800.
The bias for the pound on the 4-hour chart is bullish. The price trades above the 30-SMA, and the RSI indicates strong bullish momentum. Moreover, the price trades with the nearest resistance at 1.2800 and the nearest support at 1.2700.
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Since bulls are in control, the price will likely soon retest the 1.2800 resistance. However, bulls are not pushing too far from the 30-SMA. This is a sign they are not fully committed. Therefore, they might fail to push above the 1.2800 resistance.
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Saqib Iqbal
