GBPUSD managed to stage a recovery early Monday after closing in negative territory on Friday. On Easter Monday, the pair appears to have stabilized above 1.2400, but it is likely to fluctuate in a narrow range amid muted market activity.
Nonfarm Payrolls (NFP) in the United States increased by 236,000 in March, exceeding the market estimate of 240,000, according to the US Bureau of Labor Statistics on Friday. The unemployment rate fell to 3.5% from 3.6%, while labor force participation increased to 62.6% from 62.5%. Furthermore, annual wage inflation, as measured , fell to 4.2% from 4.6%.
The US March inflation data will be the next catalyst for the GBPUSD.
The immediate market reaction to the US jobs report resulted in a rise in US Treasury bond yields. The US Dollar was boosted, forcing the GBPUSD to fall ahead of the weekend.
Markets are currently pricing in a 60% probability of the US Federal Reserve raising its policy rate by 25 basis points at the next policy meeting, down from 71% on Friday.
If US yields fall during the American session, the GBPUSD could extend its recovery. A negative start to Wall Street’s main indexes, on the other hand, should help the US Dollar find demand and limit the pair’s upside.
It’s worth noting that, ahead of Wednesday’s March Consumer Price Index (CPI) data from the United States, investors may choose to stay on the sidelines, making it difficult for the GBPUSD pair to find direction.
GBPUSD Technical Analysis
GBPUSD is trading slightly below the lower limit of the ascending regression channel, but the four-hour chart’s 50-period Simple Moving Average (SMA) remains intact as support. Meanwhile, the Relative Strength Index (RSI) indicator has returned to 50, indicating sellers’ unwillingness.
On the downside, 1.2400 (psychological level, static level, 50-period SMA) is the first level of support. With a four-hour close below that level, further losses could be seen towards 1.2350 (100-period SMA, Fibonacci 23.6% retracement of the latest uptrend) and 1.2300 (psychological level, static level).
Buyers may show interest if the pair rises above 1.2450 (lower limit of the ascending channel, 20-period SMA), and GBPUSD may target 1.2500 (psychological level, static level) and 1.2525. (April 4 high).
