Bearish view
Sell the GBP/USD pair and set a take-profit at 1.3000.
Add a stop-loss at 1.3400.
Timeline: 1-2 days.
Bullish view
Buy the GBP/USD pair and set a take-profit at 1.3400.
Add a stop-loss at 1.3000.
The GBP/USD pair held steady on Wednesday, reaching its highest level since June 18 ahead of the crucial US jobs numbers and Kevin Warsh’s statement. It rose to a high of 1.3265, up slightly from last week’s low of 1.3142 as the US dollar rally eased.
US Jobs Data, PMI Report, and Kevin Warsh Statement
The GBP/USD pair rose ahead of key events in the next 36 hours. The most important event to watch will be the upcoming US non-farm payrolls report, which comes out on Thursday. Economists expect the data to show that the economy added over 100k jobs in June as the jobless rate remained unchanged at 4.3%.
ADP will publish the latest private payrolls report later today, with analysts expecting the data to show that the private sector added 118k jobs. Historically, the ADP and BLS reports are usually a bit different.
A strong jobs report means that the Federal Reserve will maintain a more hawkish tone in the coming months. That’s because US consumer inflation has remained above 2% in the last five years.
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Kevin Warsh, the new Fed Chair, will make a speech later today at the European Central Bank (ECB) forum in Portugal. He will likely provide hints on what to expect later this year.
The GBP/USD pair will also react to a statement from Andrew Bailey, the head of the Bank of England. Like Warsh, he will likely provide more information on the next actions by his bank. Most analysts predict that the bank will leave rates unchanged for the rest of the year.
The minor catalysts to watch will be the US and UK manufacturing PMI numbers. Economists expect the data to show that UK’s manufacturing PMI eased slightly to 53.1 in June. US PMI is expected to come in at 55.7.
GBP/USD Technical Analysis
The daily timeframe chart shows that the GBP/USD pair has held steady in the past few days. It has moved from a low of 1.3160 late last month to the current 1.3265.
The pair has formed an inverted cup-and-handle pattern, a common bearish continuation sign. It has also formed a large head-and-shoulders pattern in technical analysis.
The pair has moved below all moving averages and the Supertrend indicators. Therefore, the pair will likely continue falling, potentially to the key support level at 1.300. This view will be confirmed if it drops below 1.3160.
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