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The GBP/USD pair is testing the 100-day Exponential Moving Average at 1.2033. Traders are focusing on UK economic growth reading as well as Fed Chair Powell’s speech before the Congress, and US NFP figures.
With the new trading week, the pair is trimming some of last Friday’s gains despite the prevalent positive market sentiment led by US stocks on Monday, opening in the green.
Today’s light economic calendar in Britain keeps traders focused on the busiest docket in the United States (US). At the time of writing, the GBP/USD is trading at 1.2019. The UK economic calendar will reveal the Gross Domestic Product (GDP) on Friday, ahead of the BoE’s monetary meeting on March 23.
The US economic docket will feature Factory Orders for January, foreseen to fall to -1.8%, below the prior’s month reading of 1.8%. The US dollar is printing losses, capping the GBP/USD’s fall below the 1.2000 figure.
The Dollar Index extended its losses, by 0.14%, at 104.380. Meanwhile, US Treasury bond yields, which underpinned the USD last week’s price action, are down, with the 10-year benchmark note rate below 4%, at 3.950%.
The trading week could turn volatile due to US Fed Chair Jerome Powell’s awaited speech before the US Congress on March 7 and 8. Analysts expect Powell to maintain a hawkish stance, echoing some of his colleague’s tone. He’s expected to reiterate that interest rates must go higher for longer if the US economy continues to print solid data.
The US Nonfarm Payrolls results are anticipated on Friday in light of the startling January data. Market players anticipate that the US economy created 200K new employment. Any results that fall short of expectations would hurt the USD, which might lead to an increase in the GBP/USD. On the other hand, better statistics would call for the Fed to tighten monetary policy even more.
The GBP/USD daily chart suggests that the pair is bottoming around 1.2000. The Relative Strength Index (RSI) is in bearish territory, with a downward slope, meaning that sellers are in control. The Rate of Change (RoC) suggests the sellers are losing momentum. Therefore, mixed signals within oscillators suggest the GBP/USD pair is sideways. For a bullish continuation, the GBP/USD must clear the 200-day EMA at 1.2120.
