The British Pound (GBP) continues to grapple with a bearish tone, facing resistance below the critical 1.2600 level. Today's primary focal point in the financial markets is the eagerly anticipated US Nonfarm Payrolls report, which holds the potential to steer GBP/USD's direction as the week comes to a close. Throughout the week, the Pound has exhibited a persistent weakness, with any attempts at upside movement being thwarted below the significant barrier at 1.2600.
All eyes are now firmly fixed on the impending release of the US Nonfarm Payrolls data, which could significantly influence market sentiment.
Light European Calendar with Eyes on US Nonfarm Payrolls
The European economic calendar remains relatively light for the day, offering minimal data of note, except for the UK Consumer Inflation Expectations. However, the impact of this release on the Pound is expected to be minor, given the overshadowing significance of the impending NFP report. The primary focus among traders and investors is undoubtedly the US Nonfarm Payrolls report, which is projected to reveal a modest increase in job creation for November.
Earlier in the week, both the US JOLTs job openings and the ADP employment report fell short of expectations, fueling speculations of potential rate cuts by the Federal Reserve in March 2024. Despite these concerns, the US Dollar has managed to maintain a moderate level of demand.
Technical Indicators Suggest Bearish Momentum
Technical indicators are aligning with the prevailing bearish sentiment. GBP/USD recently printed a double-top pattern at 1.2730, a classic signal of a potential trend reversal. The currency pair has broken below the 50-hour Simple Moving Average (SMA) and is now testing the 100-hour SMA in the same timeframe, indicating a shift towards a bearish stance.
In terms of downside potential, the next support levels to watch are at 1.2550 and 1.2515, with the primary target residing at the previously mentioned level of 1.2460.
Conversely, a decisive break above the 1.2600 resistance level would negate the current bearish bias and redirect focus toward higher targets, including 1.2650 and the aforementioned double-top level of 1.2730. As traders await the outcome of the NFP report, these technical levels will likely play a pivotal role in guiding market participants' decisions and strategies.