Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.2530.
- Add a stop-loss at 1.2340.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.2373 and a take-profit at 1.2300.
- Add a stop-loss at 1.2435.
The GBP/USD price remained under pressure as traders boosted their Federal Reserve rate hike hopes after the strong jobs report. The pair was trading at 1.2415 on Friday, lower than last week’s high of 1.2530. Attention will now be on the upcoming US inflation data, Federal Reserve minutes, and a statement by Andrew Bailey, the Bank of England governor.
US inflation data, Bailey statement
The US published strong economic numbers on Friday. According to the Bureau of Labor Statistics, the economy added over 236k jobs in March, meaning that payrolls have jumped by over 1 million jobs this year alone. The BLS also revised its February jobs report figure to 326k.
Additional data in the report showed that the unemployment rate dropped to 3.5% in March while the labor participation rate rose to the highest level since the pandemic started. These numbers mean that the labor market is still tight. As a result, the Fed still has the impetus it needs to continue hiking interest rates in the coming months.
The next key data to watch will be the upcoming inflation data scheduled for Wednesday. Economists believe that the headline consumer price index dropped from 0.4% in February to 0.3% in March. On a year-on-year basis, inflation is expected to have dropped from 6.0% to 5.2%. Core inflation, which excludes volatile food and energy prices, is expected to drop from 0.5% to 0.4%.
The main risk for inflation is energy prices as the price of crude oil jumped after OPEC+ announced measures to cut production by over 1.7 million barrels per day. Brent has risen to $85 while West Texas Intermediate (WTI) jumped to $80.
The Fed will publish the latest minutes on Wednesday while Andrew Bailey will deliver a speech in which he will provide hints about what to expect.
GBP/USD technical analysis
The GBP/USD pair drifted downwards after the US jobs numbers. On the 4H chart, the pair moved below the first resistance of the Woodie pivot point. It also dropped below the lower side of the rising wedge pattern. The Relative Strength Index (RSI) moved below the neutral point of 50. It is also being supported by the 50-period moving average.
The pair has also formed a small falling wedge pattern. Therefore, the pair will likely bounce back as buyers target last week’s high of 1.2530. On Monday, the pair will be a bit muted because the UK markets will be closed for Easter Monday.
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