- The dollar weakened on Friday after a week of poor economic data.
- Economists expect the US economy to add 191,000 jobs in June.
- Investors were cheering for the impending victory of the Labor Party in Great Britain.
The GBP/USD outlook shows an uptrend, with the dollar easing ahead of the US monthly jobs report. Meanwhile, the pound strengthened as the UK general election pointed to a victory for the Labor Party.
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The dollar weakened on Friday after a week of poor economic data. Data on employment and business activity point to a slowing economy that could prompt the Fed to consider a rate cut in September. However, investors are still waiting for the main monthly jobs report.
Economists expect the economy to create 191,000 jobs in June. This would be a decline from last month when there were 272,000 new US jobs. Meanwhile, the unemployment rate could remain steady at 4.0%.
Elsewhere, investors cheered an impending victory for the UK Labor Party which could mean some political stability in the country. Moreover, the pound is heading for a 1% gain against the dollar this week.
Meanwhile, British employers believe wage growth will slow in the coming year. This would give the Bank of England room to start reducing borrowing costs. Also, the forecasts of the central bank show a drop in wages of 0.3% at the quarterly level. The BoE could be ready to cut rates by August or September.
GBP/USD key events today
- Average hourly earnings in the US m/m
- The change in US non-farm employment
- Unemployment rate in the US
GBP/USD technical outlook: Bulls weaken near 0.618 Fib
On the technical side, GBP/USD is in a steep bullish trend, well above the 30-SMA. At the same time, the RSI is in the overbought region, supporting solid bullish momentum. The price recently broke out of the range between support at 1.2625 and resistance at 1.2700.
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The bulls rallied quickly but paused when the price reached the 0.618 Fib level. Here, the price started making smaller candles, indicating exhaustion. Consequently, there is a good chance that the GBP/USD pair will pause or pull back to retest the 30-SMA support before continuing higher. If the bullish trend continues, the price could revisit the resistance level of 1.2850.
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