GBP/USD Forecast: Clinging to mid-1.35 as Traders Eye US NFP
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- The GBP/USD pair continued to rise overnight from below 1.3500 levels, showing positive momentum.
- A positive risk tone and lower US bond yields undermined the safe dollar and supported it.
- Investors seem to be stepping aside in anticipation of the US NFP report.
During the first half of the European session, the GBP/USD forecast remained in the 1.3540-50 range, though it appeared to struggle to break above the key resistance.
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On Friday, the GBP/USD pair recovered positive momentum amid moderate US dollar weakness, following a moderate pullback the previous day. It is generally believed that the strong tone in the equity markets undermined the dollar’s position as a safe haven and provided some support to the major currency.
Furthermore, the British pound has been boosted by hopes that the outbreak of Omicron will not undermine the UK economy and by higher interest rates caused by additional rate hikes by the Bank of England. The worsening COVID-19 situation in the UK, on the other hand, may limit further gains for the GBP/USD pair for the time being.
Investors were also reluctant to bet aggressively, preferring to wait on the sidelines before Friday’s closely watched US employment report. As a result of the critically acclaimed NFP report, which will be released at the North American session, markets expect a faster tightening by the Fed.
On Wednesday, the FOMC published the monetary policy meeting minutes held on 14-15 May. According to December’s data, the Federal Reserve could raise rates sooner than expected. A stronger reading will confirm the Fed’s hawkish expectations, which should be enough to rally the dollar again and cause some selling in the GBP/USD pair.
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In addition, the general market sentiment regarding risk will affect dollar momentum. Therefore, traders will utilize the events surrounding the Coronavirus saga to take advantage of some short-term opportunities surrounding the GBP/USD pair in the future.
GBP/USD price technical forecast: Bears preparing for a breakout
The GBP/USD price shows an interesting pattern on the 4-hour chart. We can clearly see a failed breakout in the form of a hidden upthrust bar. The price is now testing the bottom of that upthrust bar. Hence, this is clearly a selling opportunity with the aim of 1.3500 ahead of 1.3460.
On the flip side, if the pair cracks 1.3600, we can see a rally towards 1.3700. However, the probability of a bullish breakout is very low.
