GBP/USD finds buyers near 1.3060, eyes on US payrolls

The GBP/USD pair refreshed fresh monthly lows at 1.3060 levels, and now makes minor recovery attempts, as the bulls breathe a sigh of relief ahead of the US NFP release.

GBP/USD: Will the recovery last?

The spot stalled its selling spiral in the European session, although remains on track to book the third weekly loss, as monetary policy divergence between the UK and US continue to favour the US currency.

Lingering political concerns surrounding the UK and Brexit deal, keeps the selling bias intact around Cable. Markets are betting on the UK PM Theresa May’s resignation, as her Party members demand a new leader in order to seek a better and quicker Brexit deal.

On the USD-side of the equation, consistent firm US macro data combined with hawkish Fedspeaks continue to boost the Fed rate hike expectations for this year, while progress on the US tax reforms, after the House passed the Budget resolution on tx cuts yesterday, also adds to the ongoing broad USD strength.

Looking ahead, the recovery in the spot could sustain only if the US NFP data disappoints market and casts doubt on the Dec Fed rate hike prospects. In case of solid US jobs figures, the major could head back lower for a test of 1.3000 – key psychological levels.

Ahead of the US labour market report, markets eagerly await the speech by the BOE MPC member and Chief Economist Haldane, which is due out shortly.

GBP/USD Preferred Strategy

Karen Jones, Analyst at Commerzbank noted, “GBP/USD has collapsed lower down through the uptrend and to the 55 day ma at 1.3130. This break lower suggests another leg lower to the 1.2888 2016-2017 uptrend. Intraday rallies are likely to struggle 1.3260/90. The May high at 1.3049 may offer temporary support, we note the 13 count on the 60 and 240 minute charts. The market has recently failed at the 1.3579 2014-2017 downtrend and is viewed negatively.”