• The GBP/USD price analysis indicates caution ahead of the US monthly employment report.
• Economists predict a 75,000 US job addition in August.
• Experts believe yields will remain elevated.

The GBP/USD price analysis indicates caution ahead of the US monthly employment report. Meanwhile, the dollar remains fragile after more downbeat jobs figures on Thursday. On the other hand, worries about the UK’s fiscal health have kept pressure on the pound.

The US will release its crucial employment report later in the day. Economists predict an addition of 75,000 jobs in August. Meanwhile, the unemployment rate could come in a 4.3%. If the trend of downbeat jobs figures continues, Fed rate cut bets will climb, and the dollar will collapse.

Meanwhile, fiscal health concerns have clouded the outlook for the UK economy and its monetary policy path. A recent spike in yields has weighed on the pound. Moreover, experts believe yields will remain elevated.

“There is just an 18% chance of a cut in November; a month ago, there was a 67% chance of a cut. Thus, UK yields may be able to reverse recent gains, but we still expect UK yields to remain higher than our peers’ yields for some time,” Kathleen Brooks, research director at XTB, said.

“With uncertainty likely as we lead up to the budget in November, we believe that sterling peaked in July at $1.38, and may trade sideways below $1.35 in the short term.”
 

GBP/USD key events today

• US non-farm payrolls
   

GBP/USD technical price analysis: Bulls target the channel resistance
 

(Click on image to enlarge)

GBP/USD 4-hour chart
 

On the technical side, the GBP/USD price is trading in a bearish channel. However, within the channel, the price sits above the 30-SMA, with the RSI above 50, showing bulls are in the lead. If this remains the case, the price will soon retest the channel resistance.

However, the declining channel came after a bullish impulse leg. Therefore, there is a chance it is only a corrective move before bulls make another impulsive leg. This means there is a higher chance the price will break out from above and push past the 1.3575 resistance level. Such a move would strengthen the bullish bias and likely continue the previous bullish trend.

On the other hand, if the channel resistance holds firm, the price will drop to the channel support. It could continue in the corrective move or bears could break below the channel support. Such a move would allow GBP/USD to retest the 1.3200 support.

More By This Author: