- There is quiet in the UK as markets are closed for a public holiday.
- The US jobs report could push the Fed to relax its monetary policy.
- GBP/USD is experiencing resistance in the charts.
The GBP/USD outlook is neutral at the moment as the pair is caught below 1.2600. Investors await the jobs report from the US. This report will provide investors with guidance on the economy’s health and the Federal Reserve’s monetary policy in the second half of the year. On the other hand, UK markets are closed for a public holiday, leaving the pound at the mercy of the dollar.
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A slowdown in the jobs market might push the Fed to relax their rate hikes in the second half of the year as higher interest rates would only further damage the economy.
Paul Donavan, the Chief Economist at UBS GWM, said that employment would carry more weight in the coming months as income and job security would be more critical. He added that with steady demand, the balance of consumer spending and saving would depend on whether firms started firing workers.
GBP/USD key events today
GBP/USD investors will be paying attention to the employment data coming out in the US, including the Nonfarm Payrolls and Unemployment Rate for May. Investors are expecting nonfarm payrolls to drop from 428K to 325K. A smaller than expected value could push GBP/USD lower, while a larger than expected one could push the pair higher.
Investors expect the unemployment rate to go from 3.6% to 3.5%, a drop of 0.1%. There will also be the release of the ISM Non-Manufacturing PMI later in the day. The consensus on this is that 56.4 is coming down from 57.1.
GBP/USD technical outlook: Sideways movement
The 4-hour chart shows that prices are currently caught in a sideways move below 1.2600. The price is experiencing resistance from the 30-SMA after attempting a new bearish trend. The remaining bulls in the market are testing the new bears to see if they are ready to take over.
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If they are not, we might see bulls returning to push the price above the 30-SMA. However, if bears can gather enough momentum, we might see them pushing the pair lower and hitting a lower low. This next low should coincide with an oversold RSI reading to confirm the new bearish trend.
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Saqib Iqbal
