- GBP / USD bulls are in charge, moving into critical daily resistance.
- The US dollar is under pressure as the best of an immanent set-up is marked down by a terrible loss in ADP.
At the time of writing this article, the GBP/USD it is trading at 1.3780 and between a low of 1.3731 and a high of 1.3798, having moved at a critical level of daily dynamic resistance.
The US dollar is weak.
Data from the US has stripped the dollar of bullish bets in the middle of the week with a terrible flaw in ADP’s National Employment Report that has shown that private payrolls increased by 374,000 in August, well below 613,000. forecasts.
The report is the first in a series of three highly anticipated employment data for the week and it’s not a good start.
On Thursday, the weekly Initial Unemployment Claims ahead of the most critical employment data in the key government payroll report for August, Non-Farm Payrolls.
Investors will weigh the combination of the data as it could provide clues as to the trajectory of the Federal Reserve’s policy.
Fed Chairman Jerome Powell showed a more subdued tone in Jackson Hole on Friday and the ADP report is pushing back expectations of a reduction announcement at the Fed’s interest rate meeting this month.
Wall Street has applauded sentiment for loose money conditions for the longest time and the S&P 500 is on track to hit new all-time highs, rising 0.3% at the time of writing.
Still, investors will now focus on Thursday’s jobless claims and Friday’s non-farm payrolls, which still have the potential to impress markets and support prospects for a downsizing announcement in the near future.
That said, US economists at Deutsche Bank think “the pace of hiring will slow down a bit after the strong July report.”
However, they said that “the + 700,000 increase in nonfarm payrolls they forecast should be more than enough to keep the Fed on track to announce the phase-down at the November FOMC meeting.”
Furthermore, they expect employment growth to cause the unemployment rate to drop to a new post-pandemic low of 5.2%. “
GBP / USD technical analysis
The pound is now on the verge of a significant test of the daily dynamic resistance protecting the next resistance at 1.3880.
A break in the support structure and then the recent lows near 1.3680 open prospects for a test to the August lows of 1.3602.
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