The cable inched lower against the greenback on Friday taking the price to less than 1.5625 ahead of the US non-farm payrolls and unemployment data. The cable lost all the gains of the week yesterday following the weak construction data from UK.
The cable keeps on losing value against the US dollar and is expected to print fresh yearly lows. As of this writing, the pair is being traded around 1.5657. The pair started the Asian session at 1.5672. The pound found some support around 1.5616 and moved higher but is again overwhelmed by the resistance around 1.5685 and jumped back to 1.5655.
On the upside, an immediate resistance can be noted around 1.5760, the psychological number and 23.6% fib level. Breaking this level, the pair might move ahead to test the next hurdle around 1.5944, the confluence of 50-Day SMA and 38.2% Fib level, as demonstrated in the following chart.
On the downside, the 1.5586 continued to act as a major support since November. Breaking this level could open the door for the pair to print fresh yearly low. As demonstrated in the above chart, the range around the trend line is getting narrower which signals the possibility of breakout.
The overall bias is bearish because of lower lows and lower highs on the daily chart. The bias will remain bearish as far as the resistance area around 1.6600 remains intact.
The nonfarm payrolls to be released by the US Department of Labor remained at 230K this November, more than that of 243K of the month before, says the average forecast of different economists. Being a highly volatile data, it can cause an abrupt movement in prices. Generally speaking, a high reading is seen as positive for the greenback thus a better than expected figure may further accelerate the on-going bearish momentum in the price of GBP/USD.
The US unemployment rate remains 5.8% this November same as that of the month before, according to the median projection of analysts. As an indicator of employment level, a high reading is seen as bearish for the greenback. Thus a worse than expected figure may spur selling pressure in the price of GBP/USD.
In the light of technical and fundamental outlook, buying the pair on a breakout through the trendline resistance area appears to be a good strategy in short to medium term.
* FXOpen International, best ECN broker of 2021, according to the IAFT