The GBP / USD has been struggling to extend its gains amid growing political uncertainty.
Nonfarm payrolls US NFP focus today’s attention.
The four-hour chart shows a mixed technical image.
As the saying goes, what can not go up, must go down, and that may be the fate of the pound sterling today. The Brexit Party of Nigel Farage lost to the Labor Party in an election in Peterborough. Farage’s victory in the EU elections does not extend to Westminster politics. This should have been positive for the pound sterling, benefiting from the hope of a smoother Brexit. However, if the GBP / USD can not raise after good news, it is exposing its weakness.
UK Prime Minister Theresa May has officially retired as leader of the Conservative Party after her dramatic announcement two weeks ago. The contest to officially succeed it begins on Monday, when a dozen or more candidates will formally present their candidacy. Conservatives aim to conclude the process before July 22.
Former Foreign Secretary Boris Johnson remains the leading candidate, but faces challenges from both hard Brexiteers such as Dominic Raab, as well as from those who have softer views, such as Michael Gove and Jeremy Hunt.
In the United States, the tension is accumulating before the NFP nonfarm payrolls. Economists expect an increase of 185,000 new jobs and an annual salary increase of 3.2%. A disappointing number may increase the likelihood of a rate cut by the Federal Reserve, which President Jerome Powell alluded to earlier this week.
Trade tensions are intensifying, after the second round of talks between the United States and Mexico ended without an agreement, while tensions between the United States and China remain high. Negotiations on both fronts continue today and tomorrow.
In general, markets have many problems in their collective minds.
Technical analysis of GBP / USD
GBP / USD has made a third attempt to break above the 1.2750 level, which at first glance looks like a triple roof. However, a closer look shows that each maximum is lower than the previous one. These lower highs are a bearish sign.
Other indicators are relatively positive: the GBP / USD is moving above the simple moving averages of 50 and 100 periods on the 4 hour chart, the Momentum is rising and the RSI is rising.
Above 1.2750, the GBP / USD faces resistance at 1.2815, which was a high in mid-May, and 1.2870, which was the April low.
Looking down, Thursday’s low at 1.2670 is the initial support. It is followed by 1.2640, which was a minimum at the beginning of June. Below you expect the level of 1.2620. Finally, the 1.2558 level was seen at the end of May and is the lowest since January.