The GBP/USD pair could be in for more gains as shown by the forex signals on its 4-hour time frame. The pair just bounced off a rising trend line that had been holding since last year and is showing momentum for a rally to its previous highs.
Data from the UK economy has been bleak lately though, with both manufacturing and construction PMI disappointing. What’s propping the pound up is positive interest rate expectations from the BOE, as Carney has mentioned a couple of times that the central bank is considering hiking rates soon. Earlier today he even mentioned that the first rate hike could happen before the general elections in the UK.
GBP/USD Wave Forex Signals
There is a clear uptrend wave pattern on the 4-hour time frame of the chart and stochastic confirms that more gains are likely. The oscillator just reached the oversold mark after the pair consolidated recently and is now indicating further rallies which could last until 1.6800 or to new highs.
A pullback might still take place if the services PMI comes in weak or if the US NFP comes in very strong. In that case, the rising trend line support might still hold and the pair might find a floor around the 1.6500 mark.
Expect additional volatility during the NFP release though, as the US economy is expected to have added 200K jobs in March. If the economy posts a higher than expected reading, traders might be convinced that the Fed might hike rates sooner than later and buy up the US dollar.
On the other hand, a bleak jobs release would show that the slack in the labor market isn’t simply a result of poor weather conditions but of overall weakness in the economy. In that case, Fed policymakers might rethink their taper and force the dollar to return its gains.
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