GBP/USD: Trading the US Non-Farm Payrolls

US Non-Farm Employment Change measures the change in the number of newly employed people in the US, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.

Here are the details and 5 possible outcomes for GBP/USD.

Published on Thursday at 12:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity.  The release of US Non-Farm  Employment Change  is highly anticipated by the markets, and an unexpected reading could affect the direction of GBP/USD.

In the May release, Non-Farm Employment Change slipped t0 179 thousand, well shy of the estimate of 217 thousand. The markets are expecting a strong turnaround in the upcoming release, with an estimate of 207 thousand. Will the indicator follow suit with an improved reading?

Sentiment and Levels

The pound  continues to  flex  its  muscle, trading  above the 1.71 line. UK  data remain relatively high, and a rate increase is only a matter of time.  In the US, the recent GDP was a shocker, and the dollar could take a hit if ADP Nonfarm Payrolls miss the estimate.  So, the overall sentiment is  bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.7465, 1.7375, 1.7180, 1.6990, 1.6823 and 1.6684.

5 Scenarios

1. Within expectations: 202K to 212K. In such a scenario, GBP/USD is likely to rise within  range, with a small chance of breaking higher.
2. Above expectations: 213K to 219K: An unexpected higher reading could send the pair below one support line.
3. Well above expectations: Above 219K: The chances of such a scenario are low. Such an outcome could  prop up the pair, and a second support line could fall as a result.
4. Below expectations:  195K to 201K: A  weaker reading  than forecast could result in GBP/USD pushing above one line of resistance.
5. Well below expectations: Below 195K. In this scenario, the pair could  break above a second resistance line.

For more about the pound, see the GBP/USD forecast.

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