GBP/USD Price Volatility Eyed by US Dollar; BoE & Jobs Data Loom
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GBP/USD Price Outlook: Pound Sterling to US Dollar Volatility Hinges on Bank of England & Jobless Claims on Deck
- GBP/USD price outlook is mired by the Bank of England meeting and initial jobless claims data release on deck
- The Pound Sterling has weakened noticeably against major currencies since the start of the month as the GBP pushes lower ahead of the BoE
- US Dollar volatility could accelerate if another eye-popping spike in weekly jobless rekindles coronavirus recession concerns
GBP/USD price action might steal the limelight throughout tomorrow’s trading session as market participants respond to high-impact event risk scheduled on the economic calendar. An update from the Bank of England, as well as the weekly release of US jobless claims expected Thursday, May 07 stand out as most prominent.
The BoE meeting, set to kick off at 6:00 GMT, will precede the US jobs report due at 12:30 GMT, but both possess the potential to move markets and catalyze serious currency volatility in the Pound-Dollar. A surprisingly dovish BoE meeting likely stands to weigh negatively on the British Pound while another historic jobless claims report could spur demand for safe-haven currencies like the US Dollar.
GBP/USD PRICE CHART: DAILY TIME FRAME (18 DECEMBER 2019 TO 06 MAY 2020)
GBP/USD could face heightened selling pressure if either of these bearish scenarios materializes. On that note, GBP/USD price action has declined steadily since the start of May. This comes on the back of broad-based weakness in the Pound Sterling and strength in the US Dollar, which has pushed spot GBP/USD more than 200-pips below its April 30 close.
The Pound-Dollar now hovers slightly above the 1.2300 handle, which is a key level of technical confluence highlighted by the mid-point of the major currency pair’s year-to-date trading range. GBP/USD price action might find support around this area seeing that it is also underpinned by a positively sloped trendline extended through the recent series of higher lows.
GBP/USD PRICE ANALYSIS: POUND STERLING TO US DOLLAR IMPLIED VOLATILITY (OVERNIGHT)
Judging by GBP/USD implied volatility over the next 24-hours, the cable is anticipated to hold a 146-pip trading range between 1.2275-1.2421 on Thursday. Statistically speaking, these technical barriers of support and resistance are estimated to contain spot price action with a 68% probability. For additional insight on FX volatility, check out how to trade the top 10 most volatile currency pairs.
Read More: FTSE 100 Forecast Ahead of the Bank of England Rate Decision
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.