The GBP/USD exchange rate has formed a giant cup-and-handle pattern that could trigger more gains ahead of the upcoming Bank of England (BoE) and US nonfarm payrolls (NFP) data. It was trading at 1.3300, a few points below the year-to-date high of 1.3430. This article highlights the bullish outlook for pound sterling.
US nonfarm payrolls data ahead
The GBP/USD pair will react to the upcoming US nonfarm payrolls (NFP) data, which will provide more color about the state of he economy.
Wall Street analysts are not optimistic about the labor market due to the actions of Donald Trump.
He announced large tariffs on imported goods from other countries, weakening business confidence. The administration has also fired thousands of workers through the Department of Government Efficiency (DOGE).
A report released by ADP earlier this week showed that the US private sector created just 61k jobs in April as employers slowed their hiring process.
Economists expect the data to show that the economy created 138k jobs in April after adding an additional 228K in March. There are odds that the official figures will be lower than expected. Also, as it has done in the past, the Bureau of Labor Statistics (BLS) may downgrade the numbers it released last month.
The other key data to watch will be on wages and the unemployment rate. Analysts expect the numbers to reveal that the jobless rate rose to 4.3%, while the average hourly earnings rose to 3.9%.
These numbers follow the US’s release of weak data. The US GDP contracted by 0.3% last quarter, while the consumer confidence has plunged to pandemic levels. Therefore, there is a likelihood that the Fed will start to pivot by hinting of more rate cuts.
Bank of England decision ahead
The next important GBP/USD news will be the upcoming Bank of England (BoE) interest rate decision, scheduled for next Thursday.
There are odds that the BoE will cut interest rates by 0.25% next week since they remain higher than in other countries. The bank has left rates at 4.50%, higher than the European Union’s 2.4%.
Recent data indicate that the UK economy is softening and inflation is declining. The headline Consumer Price Index (CPI) fell from 2.8% to 2.6%. Analysts believe that the ongoing trade war could be deflationary, as China redirects goods intended for the US to European countries.
GBP/USD technical analysis
The daily chart reveals that the GBP/USD exchange rate has been in a strong bull run in the past few months. It jumped from a low of 1.2100 in January and reached a high of 1.3431.
Along the way, the pair formed a cup and handle pattern, a popular bullish continuation pattern with a depth of about 10%. It is now forming the handle section of the C&H pattern.
Therefore, measuring the same distance from the cup’s upper side shows that the pair will ultimately surge to 1.4700.
The post GBP/USD forecast: forms a giant cup and handle pattern appeared first on Invezz