Bullish view
- Buy the GBP/USD pair and set a take-profit at 1.3600.
- Add a stop-loss at 1.3400.
- Timeline: 1-2 days.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.3400.
- Add a stop-loss at 1.3600.
The GBP/USD pair retreated slightly as the recent bull run ran out of steam. It dropped to the psychological level at 1.3500, down slightly from this week's high of 1.3575.
US Jobs Data to Be the Main Catalyst
The GBP/USD exchange rate retreated slightly after a report by S&P Global showed that the economy did well in December. The services PMI rose to 51.4 from the previous 51.2, while the composite figure rose to 51.3. These numbers mean that the services sector, which employs the most people, is doing well.
A similar report from the United States showed that the services and composite PMIs rose to 52.5 and 52.7, respectively. A PMI figure of 50 and above is a sign that a sector is improving.
The next important data to watch will come out from the United States, where ADP and the Bureau of Labor Statistics (BLS) will publish the latest jobs numbers.
A report by ADP is expected to show that the private sector made some improvements in December last year as it added 45k jobs after it shed over 32k in the previous month.
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The BLS will release the November job openings data, which will provide more information about the number of vacancies in the economy. A poll by Reuters is expected to show that there were 7.67 million vacancies, up from 7.64 million in October.
The BLS will then release the latest initial and continuing jobless claims numbers on Thursday and the December non-farm payrolls (NFP) numbers on Friday.
These numbers will help to guide the Federal Reserve when making its next interest rate decision later this month. A weak jobs report will raise the odds of a rate cut in the March meeting.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD exchange rate pulled back from a high of 1.3565 to the current 1.3500 as traders waited for the upcoming jobs report.
It has remained inside the ascending channel, which is made up of a series of higher highs and higher lows that started forming in November last year.
The pair has remained above the 50-day moving average and the Supertrend indicator, meaning that bulls remain in control. Therefore, the pair will likely continue rising as bulls target the psychological level at 1.3600.
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