GPB Looks at UK GDP and US NFP for further clues. The UK services PMI data and a resurgence in appetite for risk following higher than anticipated China PMI numbers. Which provided some support for the British Sterling on Friday this week.
GBP Fundamental Perspective
The reopening of China has begun to gain momentum once more, allowing risk assets like the GBP to prosper. While the Bank of England (BoE) has been erring on the side of caution in terms of its forward guidance.
The US seems to be sticking with the aggressive narrative. Data dependency will continue to be the primary topic for the coming week.
Despite this, market responses to statements made by central banks have dwindled because little has changed regarding their forward advice.
Economic figures now carry more weight as a result of this, but Fed Chair Jerome Powell’s speech next week should garner more notice than that of the other Fed members.
GBP eyes US NFP next week
After persistently strong labor data, non-farm payroll (NFP) data (see the economic schedule in the following table) will become the primary focus from a US viewpoint.
This has been a supplement to the Fed’s bold strategy (which is largely priced in). Any statistics miss should boost the pound because forecasts have been built into the gain.
From a UK viewpoint, UK GDP will be scrutinized and is predicted to fall below 0%. Should actual data confirm this prediction, recessionary fears will resurface and may limit GBP’s upside potential.
Economic Activity Schedule
Technical Perspective and Analysis
GBPUSD is trading in a band again, close to 1.2000.
Late on Friday, the GBPUSD pair recovered from 1.1960 due to a declining US dollar. The Greenback suffered from rising Wall Street equity values and a slight drop in US yields. Above the 1.1900 mark, the duo continues to trend sideways.
Although the daily GBPUSD price action is falling against the US dollar, it is still maintaining contact with the psychological support level of 1.2000.
A recovery above the declining wedge graphic pattern is desired. Data will be the main factor in a breakout, as was already stated, and a candle closure to or above the wedge pattern could serve as confirmation.
Important resistance values
Wedge Resistance 1.2100
1.2000
Important Support levels:
Wedge support at 200-day EMA of 1.1900
