Yahoo Finance GBP/USD Makes a Third Attempt at its 200-Day Moving Average
The greenback continues to tumble, leading to further gains in all but one of the major currencies this week. The trade-weighted dollar index has posted eight straight down days and has lost 3.2% from last week’s high.
Sterling has benefited from the weakness and briefly traded at highs not seen since March in the early day. However, the pair faces resistance from the 200-day moving average which proved to be a major hurdle in April.
How the exchange rate reacts from this indicator in the session ahead might be determined by the outcome of economic data as the US reports its Non-Farm payroll data later in the day.
Analysts expect the report to show 7.75 million jobs lost in May and a rise in the unemployment rate to 19.4%. Earlier in the week, the ADP jobs report showed 2.76 million jobs lost in the US which was well below the analyst estimate of 9 million.
The earlier report suggests that today’s NFP report might come in better than expected, which could benefit the dollar. On balance, the markets have shown little reaction to incoming data following the escalation in the Coronavirus crisis. For this reason, the markets may not react unless there is a notable deviation from the expectation.
Technical Analysis
GBP/USD has shown a renewal of upward momentum after falling into a consolidation earlier in the week. Further, the pair has entirely wiped out the loss from the first half of May which also sets a positive tone.
However, the 200-day moving average has been a major obstacle for bulls in the past. If the dollar rebounds on the NFP report, GBP/USD will likely push lower to pare some of its recent gains.
On the other hand, if the pair posts a daily close above resistance at 1.2631, it would signal strength to set the tone for next week.
In the event the pair corrects lower, support is seen at 1.2555.
Bottom Line
GBP/USD touched highs not seen since March 12 in early day trading but faces major resistance that held it lower twice in April.
The US jobs report will be released later in the day. The median analyst forecast is for a rise to 19.4% in unemployment.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
