The report prepared by the US Labor Department should have unveiled a drop in the unemployment rate to 3.5% from 3.6%. However, the indicator remained unchanged, enabling the US dollar to gain in value significantly.
The buck jumped after the nonfarm payrolls showed that 390k new jobs were created in the sector, where economists had expected an increase of 320k. Notably, the figures twice exceeded the number of jobs needed to support stability in the labor market.
It means that the unemployment rate will decline in the near future. In other words, the US Labor Department report turned out to be positive, thus boosting the greenback.
Today, the macroeconomic calendar is empty. Since the pound sterling showed a slump, today, it may slightly rebound. In other words, it is expected to gain in value gradually.
GBP/USD - Technical Outlook
After a short pause, the pound/dollar pair returned to the support level of 1.2500, spurring higher demand for short positions. A gradual drop in the British currency reflects a slowdown in the corrective movement that may cause a change in the trading sentiment.
On the four-hour chart, the RSI technical indicator moves in the lower area of 30/50, pointing to traders’ great interest in the downtrend. On the daily chart, the indicator is moving around the mid-line 50, signaling a slowdown in the correction.
The Alligator’s moving averages are headed downwards on the four-hour chart, reflecting a sell-off of the pound sterling. Moving averages have numerous intersections on the daily chart, which point to a slower upward movement.
On the daily chart, we see a corrective movement from the support level of 1.2155, which does not violate the structure of the downtrend. In this case, the resistance level is located at 1.2670/1.2720.
The support level is still exerting pressure on sellers, thus causing a local slowdown. A surge in the volume of short positions will occur if the price settles below 1.2450. This, in turn, will allow the greenback to recoup its losses after the recent drop.
According to the alternative scenario, the price may rebound from the support level. In terms of the complex indicator analysis, technical indicators signal sell opportunities in the short-term and intraday periods as the price returns to the support level.
In the mid-term period, the indicator provides mixed signals due to a partial change in the trading sentiment.