GBP/USD Daily Forecast – Waiting For U.S. Employment Reports
GBP/USD Video 02.07.20.
British Pound Tests The 1.2500 Level
GBP/USD continues to rebound as optimistic economic data provides support to riskier currencies like the British pound.
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Yesterday, U.S. ISM Manufacturing PMI report for June showed that PMI increased from 43.1 in May to 52.6 in June. Markit Manufacturing PMI report was also optimistic, showing growth from 39.8 in May to 49.8 in June.
In addition, market optimism was supported by renewed vaccine hopes as Pfizer and its partner BioNTech SE reported positive results for the ongoing Phase 1/2 study of coronavirus vaccine.
This optimism put pressure on the U.S. dollar, and the U.S. Dollar Index declined towards the 97 level after unsuccessful attempts to settle above 97.5.
Today, the market will focus on additional employment data from the U.S. Traders will digest Non Farm Payrolls, Initial Jobless Claims, Continuing Jobless Claims and Unemployment Rate reports.
Unemployment Rate is expected to decline from 13.3% in May to 12.3% in June as businesses added jobs while the economy reopened. Traders will likely pay significant attention to Continuing Jobless Claims which show how many workers are still getting unemployment benefits.
The unemployment reports are set to be market-moving as they will provide a chance to evaluate the speed of the economic recovery so traders should expect significant volatility today.
Technical Analysis
GBP/USD is making a significant attempt to get out of the local downside channel. After rebounding from the major support level at 1.2250, GBP/USD quickly gained significant upside momentum and managed to get above the 50 EMA at 1.2440.
In case GBP/USD is able to stay above the 50 EMA, it will have good chances to develop additional upside momentum and head towards the high end of the current trading range at 1.2650.
On the support side, the nearest material support is located at the 50 EMA at 1.2440. If GBP/USD gets below this level, it will return back to the downside channel.
In this scenario, GBP/USD will once again find itself on the road towards the low end of the current trading range at 1.2250.
From a big picture point of view, GBP/USD remains range-bound and will need significant catalysts to start a new trend.
For a look at all of today’s economic events, check out our economic calendar.