While the Pound sterling has gained support at 1.3610, it had previously encountered opposition at one-week peaks of 1.3660 in the session. After making a substantial rebound from a year-to-date downtrend of 1.3400 last week, the duo is consolidating above 1.3600 this week. The pound has appreciated as a result of anticipation of a BoE rate hike. As growth prospects of a Bank of England rate hike, next year countered investors’ fears about scarcities and supply constraints in fuel, the pound rose all across the spectrum this week, reaching new mid-term highs against the US dollar.
Market insiders believe that the BoE will be the one to guide the rest of the world’s major financial institutions in increasing interest rates to combat inflationary pressures soon. In that event, the market is pricing the first interest rate increase, which will take place in February of next year. Aside from that, the largely anticipated United States Non-Farm Payrolls data underwhelmed, indicating a 194,000 gain in employment, significantly below the market anticipation of 500,000 new hires. The Greenback fell immediately upon the announcement of the statistics, only to recover some of its losses shortly afterward, as the market thought that the data would have no impact on the Fed’s intentions to begin trimming bond purchases in the coming months.
Outline Of The Finer Details
GBP/USD CHART. Source: Tradingview.com
On the four-hour chart, the Pound-to-Dollar exchange rate is attempting the rising trend line that has been in place since late September. If the pair breaks through that barrier, it might continue its decline toward 1.3550 (50-period simple moving average), which is above 1.3500. (Psychological level).
On the upswing, the first stumbling block is found around the 1.3630/40 zone, in which the 100-period simple moving average (SMA) maintains the static opposition of the market. Only a daily close above that mark could be interpreted as a positive development, which would likely lay the groundwork for a more significant comeback toward 1.3720 in the near term (200-period SMA).
Review of the Fundamentals
The GBP/USD duo gained modestly on Thursday, although the Sterling is likely to be struck by fresh Brexit jitters. GBP/USD was down 0.2 percent at 1.3590 after reaching a day high of 1.3640. Risk flows boosted the GBP while limiting the Greenback’s gains, although investors remained wary ahead of the crucial US September employment report. The FTSE 100 Index in the UK is steady today, and S&P 500 Futures are near 4,400.
Maroš Šefčovič, VP of the European Commission for Inter-institutional Relations and Foresight, underlined this position on Thursday. “It’s evident that there were no simple, easy fixes to complicated N. Ireland issues,” Maroš said. Britain has “lost its Brexit,” according to France’s Europe Minister, Clement Beaune, who warned that France may react over fishing grounds.
The US Department of Labor released its much-anticipated September jobs report on Friday. Investors anticipated 488,000 new jobs and 5.1 percent unemployment. In addition, an NFP number close or above market expectations would reaffirm the Fed’s aim to reduce bond buying as early as next month. But on the flip side, weak jobs data may lead to a slight GBP/USD rebound. But a technical breach may be needed to attract more buyers.