On the final trading day of the week, GBPUSD licked its wounds, awaiting the US Nonfarm Payrolls (NFP) data. The positive shift in the market sentiment pushed the US Dollar lower from nine-day highs, despite buoyant US Treasury yields. The pair witnessed a major turnaround in the American trading hours after the US Dollar correction gathered steam on the release of the NFP data. The headline payrolls climbed to 261K in October vs. 200K expected. Meanwhile, the Unemployment Rate rose to 3.7% from 3.5% and the Average Hourly Earnings, dropped to 4.7% from 5%. Softer wage inflation data from the United States seemed to have accelerated the USD sell-off while driving GBPUSD back above 1.1300 heading into the weekly closing.

As observed on the daily sticks, GBPUSD confirmed a rising wedge breakdown after closing Thursday below the rising trendline support, then at 1.1407.

Given that and BOE-led massive sell-off, a sharp pullback in the Cable was well-justified. However, the further upside appears elusive, as a dense cluster of healthy resistance levels is stacked up around the 1.1320 region. At that level, the bearish 21 and 50-Daily Moving Averages (DMA) coincide.

If GBPUSD bulls manage to find a foothold above the latter, then the rising wedge support-turned-resistance, now at 1.1445, could come into play. Acceptance above the latter will initiate a meaningful recovery towards the confluence of the wedge resistance and the descending 100-DMA at 1.1693.

On the downside, if the two-week low of 1.1147 gives way, then the next support is seen at the October 21 low at 1.1060. A breach of the latter will open up deeper declines towards the October 12 low at 1.0923. Failure to defend that cap could trigger a sharp sell-off towards the 1.0550 demand area.

GBPUSD Licked its wounds on NFP

Nov 06 2022