The Non-Farm Payrolls (NFP) report released last Friday once
again exceeded expectations, extending its impressive streak to 14 consecutive
positive outcomes. However, a closer examination of the report reveals some
less favourable aspects. For instance, the unemployment rate experienced a
notable increase from 3.4% to 3.7%, marking the largest month-over-month rise
since the onset of the pandemic. Additionally, the average number of hours
worked per week saw a decline, which is often an indication of employers
reducing hours before initiating layoffs.
Overall, the report
presented a mixed bag of outcomes that catered to different perspectives.
Optimists focused on the robust job growth but acknowledged the higher
unemployment rate and modest average hourly earnings, interpreting them as
signs of a less tight labour market that could alleviate inflationary
pressures. Meanwhile, pessimists delved into the report’s finer details,
recognizing that trends hold greater significance than absolute numbers.
In a related development,
the US ISM Services Purchasing Managers’
Index (PMI)
released yesterday fell well below expectations at 50.3, narrowly avoiding
contraction territory. The employment sub-index contracted, and the prices paid
sub-index experienced a substantial decline, returning to levels last seen in
May 2020. As a result, market sentiment shifted, and the likelihood of
additional interest rate hikes by the Federal Reserve diminished.
GBPUSD Technical Analysis –
Daily Timeframe
GBPUSD Daily
On the daily chart, the GBPUSD looks like topping
out in a Head and Shoulders
formation with the neckline standing at 1.2306 and a possible target at 1.2000.
The moving averages are also
crossed to the downside in a further sign that the bearish bias is still
intact. The divergence between
the tops with the MACD also
strengthens the case for more downside to come but the recent fundamental
developments made things less clear.
GBPUSD Technical Analysis –
4 hour Timeframe
GBPUSD 4 hour
On the 4 hour chart, looks like GBPUSD went back
within the old range between the 1.2350 support and the
1.2530 resistance. We had a bottoming out signal when the price started to
diverge with the MACD falling right into the 1.2350 support. In fact, the price
bounced there and rallied back to the resistance. This rangebound price action
around the 1.2444 key level shows that the market is really uncertain on what
way to go.
GBPUSD Technical Analysis –
1 hour Timeframe
GBPUSD 1 hour
On the 1 hour chart, we have a minor
support zone at the 1.2415 level. We should see the buyers leaning on this area
where we can find also the red 21 moving average as a dynamic support, and
target the 1.2530 resistance first and the 1.2680 high if the price breaks out.
The sellers, on the other hand, will want to see the price breaking below the
1.2415 zone to pile in and target the 1.2350 support with the 1.2000 level as
the ultimate target once the price breaks down.