GBP/USD headed to 1.3100 ahead of UK PMI, NFP
- DXY remains on the back foot
- BOE’s dovish rate hike to keep the recovery short-lived
- UK services PMI, US NFP – Key risk events
The GBP/USD pair remains better as we progress towards the European opening bells, looking to extend its post-BOE recovery mode ahead of the UK services PMI release.
GBP/USD: Bulls back in control?
The spot is seen flirting with daily tops of 1.3075, as the bulls try hard to regain ground amid resurgent USD supply, with the European traders reacting negatively to the US tax reforms announcement, adding to the weight on the US rates across the curve.
Meanwhile, Cable also derives support from persisting risk-on trades, reflected upon by higher Asian equities and oil prices. Further, a bout of profit-taking on the GBP shorts ahead of the key US payrolls data also cannot be ignored as one of the reasons behind the latest uptick in the prices.
On Thursday, the pound was dumped across the board after the BOE’s dovish rate hike announcement, meaning that the central bank hiked rates for the first time in a decade, but the omitted language from previous statements saying that more hikes could be needed than the markets expect hit the sentiment around the GBP.
Focus now remains on the UK services PMI due later in the European session for fresh impetus, however, the main risk event for today remains the US payrolls data.
GBP/USD Technical View
Karen Jones, Analyst at Commerzbank, explained: “GBP/USD has again been rejected by the recent October high and the 50% retracement at 1.3338/43. This is tough nearby resistance and yet another failure here means that attention has again reverted to the 1.3036 support line and the 1.2995 2016-2017 uptrend line. This is now exposed and represents the breakdown point to the 1.2830 38.2% retracement and the 1.2575 50% retracement.”