GBPUSD gains traction for the fourth consecutive day, reaching a new one-year high.
The GBPUSD pair begins the new week on a high note, remaining at its highest level since May 2022, in the mid-1.2600s, during the Asian session. Despite the publication of a better-than-expected US monthly jobs data on Friday. The US Dollar (USD) remained depressed near the monthly low reached last week. Owing to growing consensus that the Federal Reserve (Fed) is nearing the conclusion of its rate-hiking cycles.
This, together with anticipation that the Bank of England (BoE) would raise interest rates by 25 basis points. Later this week, supports the British Pound and keeps the bid tone. Around the major positive for the fourth consecutive day.
It’s worth noting that the main NFP figure stated that the US economy gained 253K jobs. new employment in April, much above the 179K predicted.
Further information indicated that the unemployment rate unexpectedly fell to 3.4% from 3.5 percent, while average hourly earnings increased to 4.4% from 4.3%. The figures indicated continued labor market strength, although it was offset by a dramatic downward adjustment of the prior month’s reading to 165K from the 236K previously reported.
Dovish Fed predictions keep the USD under pressure and maintain the current uptrend.
Markets have priced in the prospect of a Fed rate drop in the second half of this year, despite signals that the economy is weakening and persistent stress in the US financial sector.
As a result, the release of the Fed poll of loan officers on Monday will garner unusually high interest as markets attempt to assess the impact of regional banking. The emphasis is on lending.
Meanwhile, dovish Fed views keep US Treasury bond rates low and impose some downward pressure on the US dollar, which is seen offering some support to the GBPUSD pair.
Investors are now looking to the US CPI on Wednesday for a new push ahead of the Bank of England meeting on Thursday.
Traders, on the other hand, may hesitate from taking aggressive wagers and instead decide to sit on the sidelines ahead of the latest US consumer inflation numbers, which are due on Wednesday. Any positive surprise would call into question predictions for a rate drop as soon as September and drive some short-covering in the USD.
The emphasis will next move to the Bank of England’s monetary policy meeting on Thursday, which will have a significant impact on the Sterling Pound’s near-term mood and offer a new directional impetus to the GBPUSD pair. Nonetheless, the previously mentioned the underlying background appears to be heavily skewed in favor of optimistic traders, implying that the path of least resistance for spot prices is to the upward.
GBPUSD Technical Outlook
Technically, the current upswing over the last month or two has been following an upward-sloping channel, indicating a well-established short-term rally. Furthermore, oscillators on the daily chart are still far from becoming overbought. This, in turn, strengthens the case for a further upward advance. Traders, on the other hand, may want to wait for a break over the trend-channel resistance, which is now located around the 1.2670 level, before putting new bets.
The GBPUSD pair may then seek to break through the 1.2700 level, accelerating momentum towards the next key barrier in the 1.2775-1.2780 zone on the way to the 1.2800 round figure.
On the other hand, any major pullback presently appears to draw new buyers at the 1.2600 level. This should assist to reduce the negative effects. near the horizontal support of 1.2575-1.2570.
However, sufficient follow-through selling might cause the GBPUSD pair to fall lower below the 1.2500 psychological level and then test the ascending channel support, which is now located around the 1.2465 zone.
The latter corresponds with the 4-hour chart’s 200-period Simple Moving Average (SMA) and should serve as a solid near-term basis for spot prices, which if dramatically violated will negate the optimistic outlook and alter the bias in favor of bearish traders.
