Friday’s Jobs data sent the GBPUSD price further adrift from the key $1.4000 level. Is Sterling now firmly on the backfoot against the Dollar?
GBPUSD is unchanged this morning at $1.3870, higher by $0.0006 (+0.04%).
Sterling lost ground against the dollar on Friday following an upbeat nonfarm payrolls release. The employment data for July improved upon June’s numbers, coming in at 643,000 ahead of the consensus forecast of 870,000.
Furthermore, the unemployment rate declined to 5.4 for the period, down from 5.9% in June. A revision higher to June’s NFP compounded the positive dataset.
The US dollar made gains across the board, assisted by strengthening 10-year bonds yields which advanced to 1.305%.
Although it has to be said, the GBPUSD price held up better than the Euro, which slid 0.60% on the day. However, the reversal from $1.40000 may set the pound up for more losses in the sessions to come.
Cable technical forecast
looking at the daily chart, it’s clear that $1.4000 has been a good area of price support and resistance in 2021. The big figure has acted as a pivot for the price several times over the last few months.
When Sterling fell below $1.4000 in June, it triggered a 3% decline to $1.3571. Since then, despite numerous attempts, the GBPUSD price has failed to recover the threshold.
Therefore, this should be considered a significant level of resistance.
Increasing the downward pressure, the 50 and 100-day moving averages at $13909 and $1.3918 act as additional resistance. And until the price can recover these key averages, the path of least resistance is lower.
A logical downside target is the 200 DMA at $1.3752. And should that fail, July’s $1.3571 low becomes achievable.
Below $1.3918, I maintain a negative outlook for the GBPUSD pair. However, a close above $1.3918 signals the outlook has improved and would have the bulls eyeing the important $1.4000 once again.
GBPUSD price chart (Daily)
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