Yahoo Finanza GBP/USD Clears Above Important Resistance as Risk Sentiment Improves
Positive economic data and progress towards a Coronavirus vaccine led to an optimistic investor outlook with the S&P 500 (SPY) gaining 0.70% and posting a third consecutive day of gains on Wednesday.
GBP/USD traced this move higher is also set to post a third day of gains after posting a one-month low earlier in the week.
Meanwhile, the US dollar index (DXY) has turned sharply lower to test lows not seen in a week.
The latest US jobs numbers are scheduled for release later on today. Typically, this report gets released on Friday but has been pushed forward one day because of the July 4th holiday.
Analysts are expecting the report to show a decline in the unemployment rate to 12.4% from 13.3% at the last reading. The headline figure is expected to show a rise of 3 million jobs after 2.5 million jobs were added in May.
In the last reading, analysts were expecting the unemployment rate to at 19.4% and the report was significantly better than expected. However, this did not lead to a sustained move in the currency markets. For this reason, it does not appear likely that today’s report will establish any meaningful medium-term trends.
Technical Analysis
GBP/USD has made a notable bullish break since yesterday. The pair has scaled above a downward sloping trend channel that had encompassed price action since early June.
The exchange rate is now approaching recent highs near 1.2550. The upward momentum has been strong and might be indicative of a trend change.
Near-term support for the pair is found at 1.2500 and this level may act as a line in the sand for a near-term directional bias.
While above it, the pair shows potential for a return back to 1.2643 which was major resistance in April, triggering a turn lower twice, each time for a notable loss.
GBP/USD has essentially wiped out two months’ worth of losses at this point and in the near-term, there is some potential for a range or a pullback to work off near-term overbought conditions.
Bottom Line
GBP/USD shows renewed upward momentum as risk appetite improves.
The US will release its latest jobs report today where the unemployment rate is expected to have improved to 12.4%.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
