GBP to USD Forecasts: Bulls to Target $1.2520 on US Jobs Report

It is a quiet day ahead for the GBP/USD. There are no UK economic indicators for investors to consider, with the UK markets closed for Good Friday.

The lack of stats will leave sentiment toward the US Jobs report to influence. Weak labor market numbers from the week suggest a pickup in the US unemployment rate, favoring the GBP/USD.

The UK economy has proven more resilient, supporting a GBP/USD return to $1.25. However, dovish BoE commentary led to a pullback to sub-$1.2450 ahead of today’s US Jobs report.

On Tuesday. MPC member Silvana Tenreyro talked about cutting rates earlier and faster. Tenreyro was also in focus on Wednesday, discussing the impact of a persistent rise in bank funding costs on the UK economy.

The dovish commentary contrasted with Fed chatter on Thursday. FOMC member James Bullard talked about inflation, saying,

“We’ve got a long ways to go, and I think inflation is going to be sticky going forward. It’s going to be difficult to get inflation back down to the 2% target… so we are going to have to stay at it in order to apply pressure to make sure inflation gets back down.”

GBP/USD Price Action

This morning, the GBP/USD was 0.09% to $1.24493. A mixed start to the day saw the GBP/USD fall to an early low of $1.24324 before rising to a high of $1.24512.

Technical Indicators

The Pound needs to avoid the $1.2446 pivot to target the First Major Resistance Level (R1) at $1.2479 and the Thursday high of $1.24868. A return to $1.2475 would signal an extended breakout session. However, the Pound would need the US Jobs Report to support a breakout session.

In the event of an extended rally, the GBP/USD would likely test the Second Major Resistance Level (R2) at $1.2520. The Third Major Resistance Level sits at $1.2595.

A fall through the pivot would bring the First Major Support Level (S1) at $1.2405 into play. However, barring a data-off-fueled sell-off, the GBP/USD should avoid sub-$1.2350. The Second Major Support Level (S2) at $1.2372 should limit the downside. Third Major Support Level (S3) sits at $1.2297.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The GBP/USD sits above the 50-day EMA, currently at $1.23914. The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.2405) and the 50-day EMA ($1.23914) would support a breakout from R1 ($1.2479) to target R2 ($1.2520). However, a fall through S1 ($1.2405) would give the bears a run at the 50-day EMA ($1.23914) and S2 ($1.2372). A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a busy day on the US economic calendar. The all-important US Jobs Report will draw interest.

Labor market numbers raised fears of a US recession this week. However, hawkish Fed chatter places a greater emphasis on today’s report. Weak numbers would fuel fears of a recession, while a hotter-than-expected Jobs Report would likely raise bets of another Fed interest rate hike.

Investors should also monitor Fed chatter on monetary policy and the US economy.