- GBP / USD witnessed a dramatic intraday turnaround on Friday and reversed losses overnight.
- Intraday buying accelerated in reaction to a rather unimpressive monthly employment report in the US.
- Sustained strength beyond the 1.4200 mark will now be seen as a new trigger for bull traders.
The pair GBP/USD caught some aggressive offers during the early days of the US session and shot to fresh daily highs around the 1.4180 region in reaction to mixed US employment data.
The latest leg of a sudden rally over the last hour or so was sponsored by the emergence of some new selling around the US dollar after a slight disappointment in the NFP headline figure. The US Bureau of Labor Statistics reported that the US economy added 559,000 new jobs in May, compared to market expectations of 650,000.
This, to a greater extent, offset an upward revision of the previous month’s reading to 278,000 from 266,000 and a slightly larger-than-anticipated drop in the unemployment rate. The softer data eased market concerns that the Fed could start to decline sooner rather than later, which was evident by an instinctive fall in the dollar.
On the other hand, the British pound remained well supported by the optimistic outlook for the UK economic recovery. Optimism was further fueled by the mostly upbeat UK PMI figures for May. This, coupled with indications that the Bank of England might raise rates well into next year, acted as a tailwind for the British pound.
With the last leg up, the GBP / USD has reversed the negative movement of the previous day and a subsequent force beyond 1.4200 will set the stage for further gains. The bulls could then aim to break above the yearly highs around the 1.4245-50 region before finally pushing the pair towards 1.4300.
Technical levels
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