Hi, dear traders! According to the H1 chart, the GBP/USD pair rebounded from the 100.0% retracement level at 1.2447 on Thursday, but the decline was short-lived. There was an upward rebound, with the quotes closing above 100.0% and rising to 1.2546. If GBP/USD bounces off that level downwards, it might potentially lead to a decline towards 1.2447. If the pair closes above 1.2546, it would make further growth towards the next Fibonacci level of 127.2% at 1.2623 more likely.
As mentioned before, yesterday's upsurge of GBP/USD could be connected with the decision to "freeze" the US debt ceiling. However, today there are important data releases that could influence the pair's movements in the near future. In the second half of the day, reports on unemployment, wages, and the labor market in the US will be released. All three reports are considered critical, and the US dollar currently needs support to quickly regain the positions it has lost in recent days.
Everything will depend on the content of the reports themselves. The US labor market has shown a negative trend in recent months, with the number of new jobs decreasing every month, with rare exceptions. Currently, an average of 220,000-230,000 jobs are created per month, with the forecast for May standing at 180,000. If the non-farm payrolls exceed expectations, it would indicate that the market still underestimates the state of the labor market, and the US dollar could rise. The same goes for the unemployment report. Many have predicted that the unemployment rate would increase recently, but it remains near its decade-low levels. Today, the market expects it to rise to 3.5%, but such an increase, in my opinion, would be insignificant. I believe that today the US dollar has good chances to recoup some of the losses from yesterday.
According to the the H4 chart, the pair rebounded from 1.2441 yesterday, but was unable to resume its decline. GBP/USD is holding above 1.2441, which suggests it may rise further towards the next Fibonacci level of 100.0% at 1.2674. There is already an emerging bearish CCI divergence, which could send the pair downwards and resume the downward trend.
Commitments of Traders (COT) report:
The sentiment of non-commercial traders became slightly less bullish during the last week covered by the report. The number of long positions decreased by 8,185 units, while the number of short positions decreased by 7,181. The overall sentiment of major players remains predominantly bullish. It had been bearish for a long time, but now the number of open long and short positions is almost equal, with 69,000 and 57,000 respectively. In my opinion, the pound sterling has a good chance of resuming its uptrend, but the current events do not favor both USD and GBP. The pound sterling has been rising for a long time, and the net position of non-commercial traders has also been growing for quite a while, but it all depends on whether the long-term support for the British currency will be maintained. I believe that the uptrend is unlikely to continue at this point.
US and UK economic calendar:
US - Average Hourly Earnings (12:30 UTC).
US - Non-Farm Employment Change (12:30 UTC).
US - Unemployment Rate (12:30 UTC).
Friday features three important data releases, all from the United States. They may have a significant impact on the pair's performance in the second half of the day.
Outlook for GBP/USD:
New short positions can be opened after a rebound from the 1.2546 level on the H1 chart, with targets at 1.2447 and 1.2342. Going long on the pound will be possible if GBP/USD closes above the 1.2546 level on the hourly chart, with the target being 1.2623.
