Will the US NFP Report Trigger a Rally or Drop on GBPUSD?
Without any economic data due from the UK yesterday, GBPUSD was left vulnerable to market sentiment. The currency pair traded steadily lower from its open price of 1.3005 to close at 1.2926. Today, the highly-anticipated NFP report from the US will be released and would likely dictate price action on GBPUSD.
Earlier this week, market sentiment improved on news of a coronavirus vaccine. However, they were unconfirmed and WHO even announced that there was no proven cure yet. It did not take long for risk aversion stemming from the coronavirus outbreak to dominate trading again.
Later at 1:30 pm GMT, the US Non-Farm Employment Change report is due. It is expected to show that 163,000 jobs were added in January and that the unemployment rate would print at 3.5.%. Meanwhile, average hourly earnings is expected to show at 0.3% uptick. These numbers will be closely-watched by both market participants and the Federal Reserve.
On the weekly time frame, we can see that GBPUSD is testing support at the 100 SMA and 200 SMA. Disappointing figures would help the currency pair find support at the SMAs because they could hint that the Fed may need to ease monetary policy to support growth.
On the other hand, better-than-expected figures would be bullish for the dollar because it would reaffirm the central bank’s confidence in the US economy. The 4-hour chart shows that the currency pair is already trading below support at 1.2980. This hints that sellers are more predominant in the market and any upward movement will be limited at 1.2980 which also coincides with the 38.2% Fib level (when you draw from the high of February 5 to yesterday’s low).More content