As the USD loses momentum on Easter Monday, the GBP/USD crosses above 1.2400.
With a rise above 1.2400, the GBP/USD pair has reversed the prior week’s decline from 10-month highs. Despite an overall cautious attitude and hawkish Fed predictions, the US dollar is declining across the board. Easter Monday is a holiday, causing the market’s weak conditions to worsen.
GBP/USD has been able to launch a comeback early on Monday after closing in the red on Friday. On Easter Monday, the pair seems to have stabilized above 1.2400, although it is likely to oscillate in a narrow range amidst muted market activity.
In contrast to the market expectation of 240,000, the US Bureau of Labor Statistics said on Friday that Nonfarm Payrolls (NFP) climbed by 236,000 in the US in March. The Labor Force Participation Rate increased to 62.6% from 62.5%, and the Unemployment Rate decreased to 3.5% from 3.6%. Additionally, the average hourly earnings, which serve as a proxy for annual wage inflation, decreased from 4.6% to 4.2%.
The initial market response to the US jobs report led to a rise in US Treasury bond yields and a strengthening of the US Dollar, which forced the GBP/USD currency pair to decline ahead of the weekend.
The CME Group Fed Watch Tool indicates that markets are currently pricing in a 60% probability—down from 71% on Friday—that the US Federal Reserve will raise its policy rate by 25 basis points at the following policy meeting.
If US yields decline during the American session, the GBP/USD pair may continue to recover. On the other hand, a downward opening in the major Wall Street indices should assist the US Dollar to find demand and limit the upward potential of the pair.
It’s important to keep in mind that investors may decide to stay away from the market before the US releases its March Consumer Price Index (CPI) data on Wednesday, which would make it challenging for the GBP/USD currency pair to find direction.
GBP/USD TECHNICAL ANALYSIS DAILY CHART:
GBP/USD is currently trading in up channel.
GBP/USD is currently trading above 20&50 SMA.
RSI is in buying zone which suggests bullishness and Stochastic is suggesting a downtrend.
GBP/USD resistance is at 1.24365 & its immediate support level is 1.23885
HOW TO TRADE GBP/USD
GBP/USD is currently trading in an ascending channel, but it is currently facing significant resistance. We are observing rejection from this resistance level, and if it continues to do so, the price may continue to move downward.