The British pound continues to consolidate on Thursday, as we are waiting for the all-important Non-Farm Payroll numbers in the United States.
- I am looking at the British pound against the US dollar. The British pound continues to consolidate, although it was somewhat negative during the trading session on Thursday, but I think you've got a situation where we're basically bouncing around between 1.34 and 1.3550.
- With that, we're waiting on something. I think the most obvious candidate will be the non-farm payroll announcements coming out on Friday in the United States.
The non-farm payroll announcement, while in and of itself isn't particularly interesting and not even particularly accurate, will have a major influence on what people think the Federal Reserve will do. The unemployment rate in America is expected to be 4.5%. The non-farm employment change is supposed to be an addition of 66,000 jobs.
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With that being the case, I think it comes down to the number. The higher the number, the better off the US dollar does because we have a situation here where the Bank of England is cutting but is doing so slowly, and if the Federal Reserve has a reason to pause, then that means the dollar is mispriced.
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That being said, in the short term, it looks like we're still range-bound. It will be interesting to see if we can break out of this little rectangle. A move above 1.36 would be bullish, especially if the US dollar is falling against everything else. In that case, then yes, the GBP rises here.
On the other hand, if we break down below the 50-day EMA currently right at the 1.3367 level, then I think you start to see the dollar strengthen against the pound quite a bit, maybe even a couple of handles.
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