GBP/USD Daily Forecast – Consolidation Around 1.2400 Continues

After Record U.S. Initial Jobless Claims, Attention Turns To U.S. Non Farm Payrolls

Volatility in GBP/USD continues to decrease. After several attempts to break out of the current trading range, the pair still finds itself near the 1.2400 level.

Yesterday, the shocking increase in U.S. Initial Jobless Claims provided support for the U.S. dollar which serves as a safe haven asset of last resort. The U.S. Dollar Index breached through the psychologically important 100 level and stays above it, highlighting the U.S. dollar strength against a broad basket of currencies.

Today, the market is set to digest data on U.S. Non Farm Payrolls. The previous reading showed an increase of 273,000, while the current consensus calls for contraction of 100,000.

Obviously, all employment reports that will be released in April will look gloomy, and the only question is how bad the situation is. At this point, the bad economic data continues to serve as a bullish catalyst for the U.S. dollar which enjoys a boost from its safe haven status.

In the UK, the most important data point of the day is the Services PMI for March. The previous reading was 53.2, while the current consensus calls for 34.8. Numbers below 50 indicate contraction.

The services segment of the economy gets the biggest blow from virus containment measures, so traders and investors should not expect any positive data on this front until such measures are lifted. Put simply, the full month of April will be a month of pain for the whole services segment.

Technical Analysis

Just like yesterday, GBP/USD continues to consolidate around the 1.2400 level. The key support for the pair is located near the 20 EMA at 1.2300. In case this support level is breached to the downside, GBP/USD will lose its upside momentum, and the current phase of the rebound will come to an end.

In this scenario, the next material support is at 1.2000. There are huge gaps between levels since both the initial downside move and the rebound were very fast.

On the upside, the pair will have to breach the 50 EMA near 1.2500 to continue the rebound and have a chance to get to 1.2750, returning to pre-crisis levels and completing the rebound.