GBP/USD Technical Analysis: Awaiting Key Employment Data

In the early hours of the Asian trading session, the GBP/USD pair exhibited minimal fluctuations, largely hovering within a tight range of 1.2583 to 1.2600. Currently, the pair is trading marginally lower at 1.2586, a 0.02% decrease, as market participants adopt a cautious stance ahead of the critical U.S.

Nonfarm Payrolls release.The Bank of England (BoE) is widely expected to maintain its interest rate at 5.25% in the upcoming week and possibly through the second quarter of 2024. Market projections are leaning towards a quarter-point rate reduction by the BoE in June 2024, with another cut anticipated in September.

However, BoE Governor Andrew Bailey has emphasized the necessity of sustained high interest rates, indicating that discussions on rate reductions are not imminent.The BoE’s Financial Policy Committee has also raised concerns about riskier corporate borrowings in the current high-interest and high-inflation scenario, particularly in private credit and leveraged lending sectors.

In the U.S., recent labor market data showed a slight increase in Initial Jobless Claims to 220K, while Continuing Claims fell to 1.861M. The focus now shifts to the U.S. Nonfarm Payrolls report, expected to show an addition of 180K jobs in November. A figure exceeding expectations may bolster the U.S. Dollar, potentially constraining any upside movements in the GBP/USD pair.

Technically, the GBP/USD is navigating around the 1.2590 level, attempting to establish a foothold below it. The 50-day EMA is exerting downward pressure, suggesting a bearish inclination on an intraday basis, corroborated by the negative crossover in the stochastic oscillator.

Given these indicators, a bearish outlook seems plausible for the near term, influenced by a previously completed double-top pattern. The next target is projected at 1.2460. Conversely, breaching the 1.2590 mark could invalidate this bearish scenario and trigger a price recovery.

Today’s expected trading range for GBP/USD lies between 1.2490 support and 1.2670 resistance, with the prevailing trend leaning towards bearish.

GBP/USD Live Chart