GBP/USD Price Forecast: Pound Rally Awaits NFP Confirmation
Updated: Jun 13, 2023
POUND STERLING ANALYSIS & TALKING POINTS
BOE and Fed starting to diverge.
NFP the key driver for FX markets today.
Bullish engulf on weekly chart.
GBPUSD FUNDAMENTAL BACKDROP
The British pound has been given a significant boost after concern around the US debt ceiling has been lifted. Risk sentiment across currency markets has improved alongside commentary by Fed officials of a possible pause in the June meeting to acquire more data to generate a clearer picture of the US economy. A comparatively more hawkish Bank of England (BoE) now expected to hike again later this month due to elevated UK inflation has supplemented the bullish bias for the pound.
BANK OF ENGLAND INTEREST RATE PROBABILITIES
The economic calendar today is dominated by the US Non-Farm Payroll (NFP) report (see economic calendar below) which I cover extensively in my NFP Preview. From a cable perspective, this release may extend the rally (NFP miss or in line with estimates) or cap upside should the report come in stronger than expected.
GBP/USD WEEKLY CHART
The weekly cable chart shows a possible weekly close in the form of a bullish engulf (black), opening up room for further upside for sterling.
GBP/USD DAILY CHART
The daily chart highlights the key area of confluence around the 1.2545 resistance zone (blue) – an area bears have defended relentlessly of recent. A confirmation daily close above this level could approve the longer term bullish engulf and expose subsequent resistance zones.
Key resistance levels:
1.2545 (blue zone)
Key support levels:
50-day MA (yellow)
BULLISH IG CLIENT SENTIMENT
IG Client Sentiment Data (IGCS) shows retail traders are currently net SHORT on GBP/USD with 58% of traders holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term upside disposition.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Written by Warren Venketas, Analyst for DailyFX