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Home » Forex Technical Analysis » GBP/USD Faces Bearish Pressure Ahead of Key US Labor Data

GBP/USD Faces Bearish Pressure Ahead of Key US Labor Data

  • November 1, 2024
  • 56

The GBP/USD currency pair is hovering around the 1.2900 level after experiencing a significant drop on Thursday. This downward movement sets a predominantly bearish tone for the pair in the short term as market participants prepare for the upcoming labor market data from the United States. Despite mixed economic indicators from the US that have impeded the dollar’s strength, GBP/USD has struggled to find support, largely influenced by a shift towards safe-haven assets amid market volatility.

Recent comments from various officials in the UK regarding the budget have not clarified the market’s response. The focus has been on the Chancellor’s commitment to restoring fiscal stability through the establishment of two new fiscal rules aimed at ensuring sustainable public finances. However, the absence of specific remarks on market implications left traders uncertain about the overall impact on the British pound.

The US Bureau of Labor Statistics is set to publish the Nonfarm Payrolls report later in the day, with expectations forecasting an increase of 113,000 jobs for October, a decline from the 254,000 jobs added in September. Should the report fall short of 100,000, it may trigger speculation about potential rate cuts by the Federal Reserve, putting further downward pressure on the US dollar. Conversely, a robust figure exceeding 150,000 could bolster the dollar’s performance, likely keeping GBP/USD under pressure as the weekend approaches.

As the European trading session progresses, many investors may begin to lock in profits and adjust their positions in light of next week’s US presidential election and the Federal Reserve’s policy meeting. This behavior could lead to weaker correlations between markets, introducing volatility into major currency pairs and complicating predictions based on the labor market report.

From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart indicates that the pair is still bearish but lacks significant momentum. Support levels have formed at 1.2850, with additional thresholds at 1.2800 and 1.2760. On the upside, if GBP/USD maintains stability above the 1.2900 level, traders may look towards resistance levels at 1.2960 and 1.2980, with 1.3000 representing a significant psychological barrier.

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