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British Pound Waits on Key US Labor Data

British

Headed into Friday, the British pound is trading around 1.41 against the U.S. dollar. The benchmark GBP/USD currency exchange rate is trading quietly ahead of key monthly labor data out of the United States.

Price action is also trading below the short term 21 day simple moving average (SMA). The British pound has also broken below a rising trend line which now becomes initial upside resistance. This trend line has been in play since 13 May. Overnight the GBP/USD Forex market saw its largest daily price drop since 19 May.

The U.S. Labor Department is publishing key monthly labor data. This includes the closely monitored non-farm payroll (NFP), the monthly unemployment rate, average hourly earnings and the labor participation rate.

The United Kingdom is releasing monthly construction purchasing managers’ index (PMI) data. The European Union will publish monthly retail sales data.

Canada is also publishing key labor data. They are releasing their unemployment change for last month as well as their unemployment rate.

Daily British Pound Technical Analysis (GBP/USD)

Looking at the above daily MT 4 price action chart, the 14 day momentum indicator is trending lower and the 14 day relative strength index (RSI) is signaling overbought. This could send the British pound lower.

A daily close below the first downside barrier in play at 1.41, will open the door for the GBP/USD Forex market to challenge a rising trend line in play since 12 April. This downside barrier lines up at 1.4010. The next layer of technical support lines up at 1.4005.

A break below the rising trend line challenges the key downside barrier at 1.40 with the April low price point at 1.3920 then coming into the picture.

On the upside, there is a congestion zone at 1.4130 to 1.4140. This area is comprised of the 21 day simple moving average and that above mention rising trend line. The next upside barrier is in play at 1.42 with the monthly high lining up at 1.4250.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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