GBPUSD: Pound Sterling at Risk of Reaching 1.2677 on Strong NFP Report

The pound sterling has been volatile over the last few weeks, and the volatility looks to increase as US data has outperformed expectations recently, and the US Non-farm payrolls figures are out this afternoon.

On Friday last week, the GBPUSD pair breached a triangle pattern with a target of 1.3350, however as the dust settled and the new week started, GBPUSD slipped to a new 2020 low. To add to the risk of further declines, the US data reports have been good, with both the ISM Manufacturing and Services PMIs beating expectations. Finally, the US ADP employment report showed that the US economy created 291,000 new jobs vs. the 156,000 anticipated. The better than expected us data has triggered a wave of USD buying in most major FX pairs.

As the markets, now wait for the US NFP report for January, the GBPUSD triggered a breakdown of a rectangle pattern with the levels 1.2942 and 1.3207. The lower level of this pattern was the February 4 low, while the 1.3207 level is last week’s high. The difference between the two levels is 265 pips, and as the price is now trading below the 1.2942 level, the pattern has been completed, and the price might be able to reach the pattern target level at 1.2677. However, as seen in the chart below, traders are hesitating to short-sell ahead of the US NFP report.

If the NFP outcome is higher than the 160,000 anticipated, I suspect that the GBPUSD will slide below yesterday’s low of 1.2917, and the price could be on its way to the 1.2677. However, if the NFP or wage growth fails to meet expectations, we might see the GBPUSD trade back into its price range, and the breakdown would fail.

 

GBPUSD Six-Hour Chart

By Alejandro Zambrano, Editor In Chief at Investingcube.com, and Chief Market Strategist at ATFX.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

WHAT IS ADVFN?

ADVFN covers all things stock market.

From the news and opinion pieces on pages like this to share discussion forums, charting tools, financials, live share prices and Level 2, order book data

If you trade or invest ADVFN has the tools you need to make the right decisions.

• 

  101 Ways to Pick Stock Market Winners

  You need the number one bestselling investment guide, the definitive text for day traders, investors and stock pickers.

• 

  The Death of Wealth

  Dissecting the global economy and the financial markets, the book lays out the evidence for the next economic game changer: the Death of Wealth.

• 

  Envion

• 

  Charles Russell-Pavier

• 

  Lawrence Gash

• 

  Angelina Jennifer