Trading Above 1.38 Despite Upbeat Data, Awaits NFP
- The GBP/USD pair recovered for a second consecutive session after pulling back from 1.3800 the previous day.
- In light of the recent spike in COVID-19 cases in the UK, traders have backed away from bullish positions on the British pound, restricting the uptrend for GBP/USD.
- The GBP/USD pair won’t receive any important economic data on Thursday, so its price will be determined by the dollar’s strength.
The GBP/USD analysis looks bullish as its modest intraday gains push the price beyond the 1.3800 mark despite the upbeat US data.
The GBP/USD pair is trading at 1.3808, up 0.29%, at the time of writing on Thursday.
–Are you interested to learn more about day trading brokers? Check our detailed guide-
The GBP/USD pair hit new highs around 1.3820 during the last hour, but it did not exhibit much resilience.
On Thursday, the GBP/USD pair recovered for a second consecutive session after pulling back from 1.3800 the previous day. The uptrend was fully supported by the weak US dollar movement but did not have strong bullish confidence.
Despite uncertainty over the likelihood of the Fed’s emission reduction plan and doubts about the recovery of the US labor market, the US dollar has declined. In August, US private-sector employers hired far fewer employees than expected, according to a report released by ADP on Wednesday.
There was a moderate decline in US Treasury yields as a result of this, which dampened expectations for an imminent surge. As a result, US 10-year Treasury yields declined to a level of 1.30%, hindering the greenback.
Meanwhile, the UK and EU are at odds over how to proceed with the Northern Ireland Protocol. In light of the recent spike in COVID-19 cases in the UK, traders have backed away from bullish positions on the British pound, restricting the uptrend for the GBP/USD.
The bulls were also struggling to find acceptance above 1.3800 and break the 200-day SMA. There should be some caution before Friday’s employment report in order to avoid any significant gains.
The pair resumes the upward movement even if the United States data have come in better than expected. For example, the Unemployment Claims dropped from 353K to 340K in the last week versus 342K expected. In addition, the Trade Balance was reported at -70.1B below the -70.7B estimate and compared to -75.7B, the Revised Nonfarm Productivity increased by 2.1%, below 2.4%, which is good for the USD. At the same time, the Revised Unit Labor Costs increased by 1.3%, beating the 1.0% estimate.
–Are you interested to learn more about forex signals? Check our detailed guide-
GBP/USD price technical analysis: 200-SMA broken
The 4-hour chart shows that the price managed to climb above the 200-period SMA and cracked the psychological barrier of 1.3800. The price is now retracing a little but stays positive. The average daily range is so far 68%. It means the pair is still waiting for a market catalyst to move further higher.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.