GBPUSD: 1.4240 Beckons as Dollar Decline Continues

Summary:

GBPUSD looks set to break above the key 1.4000 level as dissapointing jobs numbers point to further losses for the US Dollar.

GBPUSD looks set to break above the key 1.4000 level as disappointing job numbers point to further losses for the US Dollar.

The British pound finished the week at 1.3985 after once again testing the important resistance against the Dollar.

Weaker than expected, actually much weaker than expected, Non-Farm Payrolls data out of the U.S has increased the pressure on an already flailing greenback.

The NFP print data for April, at +277k, was a huge miss against the consensus estimate of +978k new jobs created in the month.

The lack of momentum in the U.S labor market should provide the catalyst for GBPUSD to hurdle the recent resistance and put February’s 1.4241 high back in focus.

The GBPUSD price has been steadily trending higher from its March 2020 pandemic low of 1.1409. However, most of those gains came in the 9 months following. 2021 has seen the GBPUSD pair higher by only 2.5%. Considering the relative weakness of the Dollar, the Pound has struggled. In light of yesterday’s data, this may be about to change.

Technical Outlook

A close above the psychological 1.4000 level could see the market test the February high of 1.4241. On continued Dollar weakness, there remains potential for cable to extend to the 2018 high of 1.4377.

Bulls may look to add on a close above 1.4000 and target the February high as an area to take profit. Stops should then be placed back below the figure.

A failure to take out resistance iin the coming days would likely see the GBPUSD rate back to its suypport at 1.3800, where an ascending trend line meets the low of Aril 3rd.