Symmetrical Triangle Breakout!
The GBP/USD closed at $1.3972 after placing a high of $1.4007 and a low of $1.3886. GBP/USD pair recovered its previous day's losses and extended gains to reach its highest level since April 20 amid U.S. dollar weakness. The U.S. dollar edged lower on Friday and reached $90.1 9 levels as the selling pressure rose after dismal NFP data from April. The recent decline in jobs offered to Americans in April did not meet the expectations of near 1 million and came in very little as 266K and showed that despite the reopening of the U.S. economy, the employment goal set by Federal Reserve was far from achieving.
The U.S. President Joe Biden said on Friday that lower-than-expected April's job growth revealed that the U.S. economy was still striving to improve from the coronavirus pandemic. He also said that his massive infrastructure and family support bills were needed now more than ever to support the economy.
The rising prices of GBP/USD on Friday could also be attributed to Prime Minister Boris Johnson's Conservatives victory in the Northern seat after defeating Labour Party in its heartland. The pro-independence Scottish National Party was close to winning an absolute majority and paving the way for another clash with London over a new referendum.
Prime Minister Boris Johnson invited the leaders of the devolved nations to a summit on how Team U.K. could recover from the pandemic. This call was followed by the SNP's fourth Scottish Parliament elections win in arrow and Labour's win in the Welsh Parliament. The conservative win against the Labour party in parliament elections added strength to the British Pound and pushed GBP/USD higher. Ben Broadbent, the Bank of England Deputy Governor, said that he still expected Brexit to induce a burden on the economy's long-term supply capacity on Friday.
He added that the Bank now expects more people to move off the furlough scheme and back into employment when the scheme was coming to an end. The comments from Broadbent added weight on the British Pound and kept the GBP/USD gains limited for the day.
On the data front, at 13:30 GMT, the Construction PMI reduced to 61.6 from the forecasted 62.0 in the U.K. and weighed on British Pound that limited the upside momentum in GBP/USD. At 17:30 GMT, the Average Hourly Earnings improved to 0.7% against the projected 0.0% and supported the U.S. dollar.
In April, the most awaited Non-Farm Employment Change fell to 266K against the estimated 990K and weighed on the U.S. dollar, supporting the rising trend in GBP/USD. In April, the Unemployment Rate advanced to 6.1% that was previously projected as 5.8%, and weighed on the U.S. dollar that added gains in GBP/USD. At 19:00 GMT, the Final Wholesale Inventories decreased to 1.3% against the anticipated 1.4% and supported the U.S. dollar. The Mortgage Delinquencies came in as 6.38% in comparison to the previous 6.73%.
GBP/USD Intraday Technical Levels
Pivot Point: 1.4020
GBP/USD - Technical Outlook
The GBP/USD is trading sharply bullish at 1.4059 level, having disrupted a symmetrical triangle pattern on the 4-hour chart. The Cable has closed three white soldiers' candlestick pattern that demonstrates a solid bullish bias among investors. The weaker dollar is pushing the pair higher, and it may expose the GBP/USD pair towards the 1.4084 resistance level. The 1.4084 resistance level is extended by 161.8% Fibonacci expansion. On the other hand, the previously violated resistance level of 1.3980 level is likely to offer support around 1.3980 level. Bullish bias dominates over 1.4020 level today. All the best!
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