- GBP/USD will end the week with heavy losses of 1.74%.
- Positive US jobs numbers and BoE speeches keep sterling under pressure.
- GBP/USD Price Forecast: Remain biased to the downside unless GBP bulls retake 1.2600.
Sterling appears to be regaining its composure but continues to lose on the day, down 0.06%, after the Bank of England hiked rates by 25bps on Thursday. At the time of writing this article, the pair GBP/USD it trades at 1.2352.
US jobs numbers were positive and BoE expects inflation to hit 10%
Global equities remained lower during the North American session, while the 10-year US Treasury yield rose to a year-to-date high of around 3,131%. Although US yields are higher, the dollar is giving back some earlier weekly gains, as shown by the US dollar index, a gauge of the dollar’s value against a basket of six currencies, with a drop of 0.18%, standing at 103,370.
The US Department of Labor reported nonfarm payroll figures for April, showing the economy added 428,000 new jobs, up from 391,000, although the unemployment rate was unchanged. Additionally, the median hourly wage rose 5.5%, slightly lower than expected, and would not deter the Federal Reserve from continuing its tightening cycle.
ING analysts viewed the report as mixed. They added in a written note that “the unemployment rate was stable at 3.6% instead of falling to 3.5% as expected, which in combination with a softer average hourly earnings figure of 0.3% per month instead of the forecast consensus of 0.4%. (and slower than the 0.5% increase in March) can be interpreted as a sign of less inflationary pressures in the labor market”.
Elsewhere, Bank of England (BoE) Chief Economist Huw Pill crossed the wires mid-European session. He said inflation in the UK is becoming more persistent, adding that inflation is rising to 10% and he expects growth to stall in the second quarter.
Next week, the UK economic docket will reveal the Gross Domestic Product (GDP) for March, along with the Trade Balance and Manufacturing Production. Across the pond, a slew of Fed statements throughout the week would dominate the headlines, along with April’s Consumer Price Index (CPI) and Producer Price Index (PPI).
GBP/USD Price Forecast: Technical Outlook
The GBP/USD pair still has a downward bias, although it did face solid support at the June 2020 lows around 1.2251. Also, the MACD, as the histogram shows, is “forming” a positive divergence, which is usually a sign that the trend is about to change. However, unless the MACD line crosses above the signal line, GBP/USD traders should refrain from opening new long bets on the pair.
To the upside, the first resistance would be the 1.2400 level. A break above would expose crucial resistance areas such as the July 2020 swing low at 1.2479, followed by 1.2500. On the other hand, the first GBP/USD support would be 1.2300. A break of the latter would expose the yearly low at 1.2275, closely followed by the June 2020 low at 1.2251.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
