With today being May Day in the UK, we can expect thinner trading conditions ahead. GBPUSD is currently trading higher by more than 30 pips at 1.2394 as the currency pair recoups some of its losses from yesterday’s BOE remarks. Now, all eyes will be on the US NFP report due later today at 1:30 pm GMT.
Yesterday, GBPUSD initially traded higher after the BOE said kept its interest rates unchanged. Because this was widely expected by the market, the news had an initial bullish effect on the currency pair. However, BOE Governor Andrew Bailey later on hinted in a speech that they could increase quantitative easing as early as June. This consequently pushed GBPUSD lower.
The currency pair could trade higher if the US labor figures show a bigger figure for job losses than the expected 22 million. On the other hand, if the NFP report tops expectations, the dollar could strengthen and push GBPUSD lower.
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GBPUSD Outlook
On the 4-hour time frame, it can be seen that GBPUSD has pulled back some of its losses. By drawing the Fibonacci retracement tool from the high of April 30 to the low of May 7, the currency pair is currently trading around the 38.2% Fib level. This price, around 1.2400, also coincides with a broken trendline (from connecting the lows of April 7, April 21, and April 24). Reversal candles around this price at 1.2400 could mean that GBPUSD may soon retest yesterday’s lows at 1.2265. If there is enough bearish momentum, it may even go to as low as 1.2165.
On the other hand, a strong close above yesterday’s high at 1.2417 could mean that GBPUSD may soon rally to its April 30 highs around 1.2600.
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