The GBP/USD exchange rate has bounced off the upward trendline, which I mentioned in my previous analysis. The currency pair started the day in the red, trading at $1.276, 0.5% below its weekly high. The candle turned green as the NFP data got released in the US.
At US Open, the DXY started to tank and slid 0.6% from its previous close. The bears are now targeting the next support of $101.349. If the DXY continues its downward trend, GBP/USD might extend its gains next week.
Non-Farming Payroll (NFP) data was announced by the US today. The data showed an increase of 187k jobs instead of the forecasted 200k jobs. Due to this, DXY got caught in a headwind and is currently down 0.6%, as the news is bearish for the dollar. Further rate hikes by the US Federal Reserve seem unlikely now as the increase would further weaken the economy.
Yesterday, The Bank of England announced a rate hike of 25bps, but the currency pair GBP/USD failed to respond to this change. This can be due to the UK having a higher inflation rate than the US. For the Pound to achieve stability, a rate of 50bps would have made more sense.
The following GBP/USD exchange rate chart shows that the price is currently bouncing off the trendline. In case of a breakdown below this trendline, the support level of $1.242, shown below, will be the next target. If the price continues to slide below $1.242, the next target for the bears could be the 200-moving average.
If the bulls can maintain the momentum gained due to the NFP news, last week’s high of $1.29956 is totally on the cards. However, a deeper pullback needs to happen in the DXY for this scenario to play out. Considering the past few day’s price action, the bears are still very much in the game.
In the meantime, I’ll keep sharing the updated forecast on the British pound along with my personal trades on Twitter, where you are welcome to follow me.
This post was last modified on Aug 04, 2023, 16:50 BST 16:50