- GBP/USD bulls are in charge, moving on a critical daily resistance.
- The US dollar is under pressure as best of an immanent taper are dialled down by terrible ADP miss.
At the time of writing, GBP/USD is trading at 1.3780 and between a low of 1.3731 and a high of 1.3798 having moved in on a critical level of dynamic daily resistance.
The US dollar is weak.
US data has stripped the greenback of bullish bets midweek with a terrible miss in the ADP National Employment Report that has shown private payrolls rising by 374,000 in August, well short of the 613,000 forecasts.
The report is the first of a series of three highly anticipated jobs data for the week and it’s not a good start.
On Thursday, the weekly Initial Jobless Claims comes ahead of the most critical of the jobs data in the key government payrolls report for August, Nonfarm Payrolls.
The combination of the data will be weighed by investors as it could provide clues about the Federal Reserve’s policy path.
The Fed’s Chairman, Jerome Powell, sounded a more dovish tone at the Jackson Hole on Friday and the ADP report is pushing back expectations of a taper announcement at this month’s Fed interest rate meeting.
Wall Street has cheered the sentiment of loose money conditions for longer and the S&P 500 is on track to fresh all-time highs, higher by some 0.3% at the time of writing.
Still, investors will be now focussing on Thursday’s Jobless Claims and Friday’s Nonfarm Payrolls which still have the potential to impress markets and support the prospects of a taper announcement in the near future.
With that being said, Deutsche Bank US economists think that ”the pace of hiring will slow somewhat after the strong report in July.”
However, they said ”the +700k increase in nonfarm payrolls that they’re forecasting should be more than sufficient to keep the Fed on track to announce tapering at the November FOMC meeting.”
Additionally, they expect that jobs growth should see the Unemployment Rate fall to a fresh post-pandemic low of 5.2%.’
GBP/USD technical analysis
The pound is now on the verge of a significant test of the daily dynamic resistance that guards the 1.3880s next resistance.
A break of the support structure and then the recent lows near 1.3680 opens prospects of a test to the August swing lows of 1.3602.