The GBP/USD and EUR/GBP face turbulence post the stronger-than-expected US Jobs Report, driving up bond yields and the US dollar. The US unemployment rate, now at 3.7%, challenges expectations of a 2024 interest rate cut.
Transitioning to the upcoming week, major economic events include monetary policy updates from the Federal Reserve, Bank of England, and European Central Bank. While no rate changes are expected, the language in post-decision press conferences will shape currency movements.
Government bond yields and rate expectations influence FX markets; the Fed and ECB appear in a tug-of-war over potential rate cuts. Current market projections indicate lagging rate cut expectations for the Bank of England.
GBP/USD faces downward pressure, eyeing a break below 1.2500. Potential support lies at the 200-day SMA (1.2481) and 50% Fibonacci retracement level (1.2471). Further downside could target 1.2447.
On the EUR/GBP front, stabilization follows a recent sell-off. The simple moving averages suggest a negative setup, with a probable re-test of 0.85493. A dovish ECB or hawkish BoE might break supportive levels down to 0.84918.
Retail trader data on EUR/GBP show 72.62% net-long traders, with a long-to-short ratio of 2.65 to 1. While net-long positions decreased by 4.66% recently, they remain higher than last week. Net-short positions increased by 6.04% but are lower than the previous week by 0.52%.
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Conclusion:
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