GBP/USD bears cheer 50-DMA break to approach 1.2400 GBP/USD

2023年6月5日

GBP/USD remains on the back foot around 1.2430 as it stretches the post-NFP reversal from a three-week high during the early hours of Monday’s Asian session. The Cable pair drops below the 50-DMA support while extending the previous day’s U-turn from a horizontal resistance area.



The Relative Strength Index (RSI) indicator on the four-hour chart stays well above 60 and the 20-period SMA on the same chart completed a bullish cross with the 100-period SMA, reflecting the buildup of bullish momentum. GBP/USD faces interim resistance at 1.2550 (daily high, static level) ahead of 1.2580 (fixed level) and 1.2650 (beginning-point of the latest downtrend).

On the downside, 1.2520 (Fibonacci 23.6% retracement) aligns as immediate support before 1.2500 (psychological level) and 1.2480 (200-period SMA, Fibonacci 50% retracement).


GBP/USD has been moving sideways in a narrow channel above 1.2500 so far on Friday, with market participants refraining from making large bets ahead of the all-important May jobs report from the US.

The persistent selling pressure surrounding the US Dollar (USD) fuelled GBP/USD's rally on Thursday and the pair reached its highest level in three weeks above near 1.2550. The significant downward revision to the first-quarter Unit Labor Costs data, from 6.3% to 4.2%, triggered a fresh leg of USD selloff in the American session by feeding into dovish Federal Reserve (Fed) expectations.

The US Bureau of Labor's monthly report is expected to reveal an increase of 190,000 in Nonfarm Payrolls (NFP) in May, compared to 253,000 in April. Average Hourly Earnings are forecast to rise 4.4% yearly, matching the previous month's reading.

In case NFP growth comes in below 150,000, investors could see that as a development reaffirming a pause in the Fed's policy tightening in June and forcing the USD to stay on the back foot. A no change in wage inflation, or an unexpected decline, should have a similar negative effect on the USD's valuation.

If the labor market report shows a healthy increase in payrolls, near 250,000, market participants could shift their stance and start pricing in a more substantial probability for one more 25 basis points Fed rate hike at the next meeting. In that scenario, GBP/USD could turn south ahead of the weekend.