Despite the soft ISM Manufacturing PMI, which has consistently been below the 50 benchmark since November 2022, the Bank of England’s recent 25 basis point rate cut led to a 1% decline in GBPUSD. Today’s focus is on Nonfarm Payrolls, which are expected to provide insight into the US labor market, a primary concern for the Fed, and an indicator of the economy’s overall health.
High Impact Economic Events
Friday 12:30 am (GMT+0) – USA: Nonfarm Payrolls (USD)
GBPUSD Chart Blog 0208
Chart Analysis
The uptrend that began on April 22, rebounding from the support level at 1.22993, came to an end on July 17, when the GBPUSD exchange rate reached its peak for the year at 1.30439. As the buyers were unable to maintain the upward movement of the GBPUSD, the sellers gained control and drove the price lower. The downward direction was also indicated by the price consistently being below both the 20 and 50-period Exponential Moving Average. In addition, the Momentum oscillator fell below its 100 baseline, indicating a bearish trend. The Relative Strength Index is still above the oversold zone, suggesting that further decline is still possible.
Key Resistance Levels
Should the buyers gain market control, traders may direct their attention toward the three potential resistance levels below:
1.28066:The primary resistance level is located at 1.28066, which corresponds to an internal trendline marked on July 27. 1.29209: The second level of resistance is observed at 1.29209, calculated as the R1 resistance using the weekly Pivot Points method. 1.30439: The third price objective is 1.30439, which corresponds to the peak marked on July 17.
Key Support Levels
Should the sellers maintain market control, traders may consider the three potential support levels listed below:
1.26125: The first downside target is set at 1.26125, indicating a strong support level tested multiple times and noted on June 27. 1.24455: The second support level is 1.24455, located at a daily low reached on May 9. 1.22993: The third support line is located at 1.22993, identified at the start of a rally that began on April 22.
Conclusion
The current market analysis for GBPUSD reveals a bearish trend driven by the inability of buyers to sustain the uptrend that ended on July 17, 2023. The downward trend is supported by the price falling below the Exponential Moving Averages and the Momentum oscillator dipping below its 100 baseline. Traders are focusing on the Nonfarm Payrolls for insights into the US labor market, which could further influence the Fed’s monetary policy decisions.
In the event of a bullish reversal, traders should monitor the key resistance levels at 1.28066, 1.29209, and 1.30439. Conversely, if the bearish trend continues, the support levels at 1.26125, 1.24455, and 1.22993 will be crucial for traders to watch. Overall, the market remains in a critical state, with upcoming economic events and technical indicators suggesting possible further declines but also potential for significant rebounds.
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