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GBP/USD Drifts Ahead of NFPs, FTSE 100 Breaks Support After US Equity Rout

GBP/USD Drifts Ahead of NFPs, FTSE 100 Breaks Support After US Equity Rout

Nick Cawley, Senior Strategist


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GBP/USD and FTSE 100 Prices, Charts and Analysis:

  • GBP/USD little changed despite EU/UK trade talk impasse.
  • FTSE 100 has broken multi-week support and may struggle further.

The monthly US Labor Report (NFPs) is released later today (12:30 UK) and is keeping a lid on USD-pair price action. The US dollar has regained some composure after its multi-month sell-off but it remains to be seen if this recent pick-up is sustainable, especially if today’s job report disappoints. After 22 million jobs were lost between March and April, employment in the US has been picking up but this is now slowing down with this month’s expected 1.4 million job growth lower than July’s 1.76 million and June’s 4.79 million. If expectations are made today, the US payroll report would still show that 11 million people are without a job compared to pre-COVID-19 levels.

NFP and Forex: What is NFP and How to Trade it?

The British Pound remains elevated against the US dollar despite increasingly gloomy EU/UK trade forecasts. The ongoing, and overriding, message that neither side is willing to shift on major areas of concern – fisheries and level playing field commitments – suggests that a no-deal option at the end of this year may not be fully priced into Sterling-pairs.

GBP/USD currently trades around 1.3280 and is mid-range of a recent bullish-flag formation. Support is provided by the 20-dma at 1.3204 ahead of trend support currently at 1.3188, while trend resistance is at 1.3360. The pair are no longer in overbought territory (CCI), while volatility (ATR) is steady around 100 pips.

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GBP/USD Daily Price Chart (January – September 4, 2020)

GBP/USD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -13% 7% -3%
Weekly -8% 11% 1%
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US Equity Markets Roiled

The US equity space came under heavy selling pressure Thursday with the tech market hit the hardest. The DJIA closed 2.78% lower, the S&P 500 shed 3.5% while the NASDAQ lost a fraction under 5% as sellers took complete control of the market. European indices opened lower today and the FTSE 100 is now below multi-week support and may struggle in the short-term. The double-low around 5,850 had held firm until this week, but yesterday’s late sell-off broke through this support with conviction. The index needs to close and open back above this level if it is to push any higher.

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FTSE 100 Daily Price Chart (January – September 4, 2020)

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What is your view on Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.