Yahoo Finance GBP/USD Remains Within a Range Despite Notable Dollar Recovery
The US dollar has gained against all the major currencies and is up about one and a half percent against the pound in the week thus far.
GBP/USD has shown resilience as the pair has continued to hold within a relatively tight range for the entire week. Volatility in the currency pair slowed drastically this week as it has shown price swings of 5% or higher in the prior three weeks.
Survey data of purchasing managers in the UK services sector revealed a sharp fall in new work and widespread job cuts. Reporting agency IHS Markit indicated the index had the fastest decline since it began reporting the data about 24 years ago.
Yesterday’s US jobless claims data indicated the US economy is also hit hard by the Coronavirus. A record 6.6 million new individuals filed for unemployment benefits in the past week which was nearly double the analyst estimate. Further, it followed a read of 3.3 million last week, which was also a record at that time.
Later in the day, the US will release its monthly NFP jobs report. Analysts expect that it will reveal a loss of 100 jobs in March and a rise in the unemployment rate to 3.8%. Over the last six months, the jobless rate has otherwise fluctuated between 3.5% to 3.6%.
Technical Analysis
While GBP/USD remains range bound, it went from trading at the upper end of the range yesterday to falling to the lower end of it since.
A stronger dollar has been dominating the majors and appears to be weighing on the currency pair.
Yesterday, the dollar index (DXY) scaled above an important resistance level that had previously held it lower in October and February. Further, it also rallied above the psychological 100.00 level which some dollar bears may not have expected after the sharp drop last week.
The odds are tilted in the favor of a downside break in GBP/USD although today’s US jobs report may ultimately decide which way the pair breaks.
Range support for GBP/USD remains at 1.2252 while resistance is seen at 1.2472.
Bottom Line
GBP/USD remains within a range. A break in either direction will tend to set the tone for a near-term direction.
Today’s US jobs report stands to trigger a volatile reaction which might cause a range break in the currency pair.
This article was originally posted on FX Empire
