- The British pound is gaining in the week, after four consecutive weeks on the red.
- The market sentiment is a mixed bag, after a dismal US employment report.
- The US Nonfarm Payrolls came at 194,000, severely lower than expected.
The GBP/USD climbs on the back of a weaker than expected US employment report, advancing 0.12%, is trading at 1.3637 during the New York session at the time of writing. Earlier in the European session, the cable dropped to a daily low of 1.3588 on previous price action ahead of the Nonfarm Payrolls report.
In the aftermath of the US employment report, the market sentiment is a mixed bag, as witnessed by major European and American stock indices, split between gainers and losers. Meanwhile, the greenback is down 0.17%, as portrayed by the US Dollar Index (DXY), clinging to 94.05.
The US 10-year benchmark note rate is rising three and a half basis points, sitting at 1.60%, putting a lid to the GBP/USD, despite a weaker buck
US Nonfarm Payrolls missed expectations hugely
The US Bureau of Labor Statistics (BLS) released the Nonfarm Payrolls report for September. The reading at 194,000, was worse than the 500,000 estimated by most analysts, complicating a potential bond tapering decision by the Federal Reserve to reduce the pandemic-era stimulus.
In the last monetary policy meeting, Fed’s Chair Jerome Powell said that “a reasonably good employment report” for September would be needed to meet that test.
The positive of the report is that the unemployment rate fell to 4.8% from 5.1%.
GBP/USD Price Forecast: Technical outlook
In the daily chart, the GBP/USD is approaching near Tuesday’s highs at 1.3648. A daily break above the latter could pave the way for further gains. The first resistance level would be 1.3700. A breach of that level would expose key essentials supply zones at the 50-day moving average (DMA) at 1.3750, followed by the 100 and the 200-DMA’s confluence around 1.3845.
The Relative Strength Index (RSI) is at 48, slightly flat, but below the 50-midline, suggesting some downward pressure on the pair.
KEY ADDITIONAL LEVELS TO WATCH