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GBP/USD Analysis Today 04/06: Bulls Take Control (Chart)

By Published On: June 4, 20243 min readViews: 2100 Comments on GBP/USD Analysis Today 04/06: Bulls Take Control (Chart)

  • GBP/USD has been gaining ground against the US dollar since the start of trading this week, with markets cautiously awaiting US jobs data at the end of the week.
  • Sterling/dollar tests the 1.2817 resistance level, its highest in over two months.
  • What is the GBP/USD forecast for this week’s trading?

We expect GBP/USD to test the $1.28 level on the back of strong technical momentum and potential weakness in the all-important US jobs report. According to forex trading platforms, GBP/USD is in a short-term uptrend and could test 1.28 and above in the coming days. Moreover, momentum is strong with the RSI at 63 and signaling higher again, while the exchange rate remains above its key moving averages.

1.28 level is the prize for dollar bulls but if this week’s data moves in favor of the US dollar, the key support level to watch is 1.2685. Recently, buying has been persistent over the past two weeks and we see this as the level that needs to be broken if we want to see the exchange rate fall.

According to the economic calendar, there is nothing major out of the UK this week, which in itself is a supportive development for sterling, which tends to perform better when it is not being disturbed by data and policymakers at the Bank of England who seem keen to cut interest rates at the earliest possible opportunity. The Monday PMI reading is likely to attract some attention, although we would not place much weight on any market moves ahead of the all-important jobs report on Friday. Last month, US nonfarm payrolls came in below 200,000 for the first time since Q4 2023. All eyes are on this month’s release to gauge whether this was just a one-off or whether new hiring is indeed slowing. This is of paramount importance to the US.

The market is looking forward to a key US non-farm payrolls reading of 180k and an unemployment rate of 3.9%. Average hourly earnings are expected to rise 3.9% year-on-year. If US labor market data is weak, markets could increase the likelihood of a first rate cut in July, which would further weaken the US dollar.

The US central bank is in no rush to cut rates, leaving markets pricing in a full rate cut by December, though September would be 50/50, according to analysts at City Index. Furthermore, the jobs report and wage data should provide further evidence on this front. In recent weeks, we have seen bond yields rise, as investors grow increasingly concerned about the prospect of higher interest rates for longer. If this sentiment changes, for example due to a series of weaker-than-expected US data, the US dollar could finally break out more decisively and start a clean breakout. However, if the data remains too hot, this could, paradoxically, weigh on risk sentiment as rate cut expectations are pushed further.

Technical forecasts for the GBP/USD pair today:

As we mentioned before and according to the performance on the daily chart, the bulls’ success in pushing the GBP/USD price above the resistance levels of 1.2775 and 1.2830 will motivate the bulls to head towards the psychological resistance of 1.3000, which confirms the strength of the bulls’ control over the general trend. Obviously, this may happen quickly if the US jobs numbers come in below all expectations. On the other hand, the support level of 1.2600 will remain the most important for the strength of the downward trend again.

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