Market Analysis

GBPUSD

Prediction: Bearish

Fundamental Analysis:

GBP/USD has experienced a decline for three consecutive days, trading around 1.3060 during Tuesday’s Asian session. This drop is largely attributed to a stronger U.S. Dollar, buoyed by recent labor data that cast doubt on the likelihood of a significant Federal Reserve rate cut in September.

On Friday, the pair faced selling pressure during the American session, erasing previous gains and ending the week unchanged. It has now reached its lowest level since August 22, falling below 1.3100. Despite weaker labor market data, the U.S. Dollar saw increased demand as a safe haven ahead of the weekend.

The U.S. Bureau of Labor Statistics reported an August Nonfarm Payroll increase of 142,000, falling short of the 160,000 forecast, while the unemployment rate decreased to 4.2%. In contrast, the UK’s FTSE 100 Index rose over 0.5%, and U.S. stock futures gained between 0.4% and 0.75%. With limited macroeconomic data scheduled for release, the U.S. Dollar's strength may wane if risk appetite increases later in the day.

Later today, the UK’s Office for National Statistics will publish employment data, and market participants will be eyeing the U.S. Consumer Price Index (CPI) data set for Wednesday.

Technical Analysis:

GBP/USD has closed a 4-hour candle below the 100-period Simple Moving Average (SMA) for the first time since mid-August. The Relative Strength Index (RSI) on the 4-hour chart is approaching 30, suggesting the pair may be nearing oversold conditions.

If the 1.3100 level (the 100-period SMA) acts as resistance, sellers could continue to dominate GBP/USD. Key support levels to watch include 1.3040 (Fibonacci 38.2% retracement), 1.3000 (a psychological level), and 1.2960-1.2970 (Fibonacci 50% retracement and 200-period SMA).

Conversely, if GBP/USD breaks above 1.3100, it may face resistance at 1.3130 (Fibonacci 23.6% retracement), followed by 1.3150 (50-period SMA) and 1.3200 (another psychological level).

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