A period of calm in the bond market has helped breathe life into GBP/USD, which has held onto the prior day’s gains having hovered around 1.2150, but all eyes now rest on the upcoming U.S. non-farm payrolls report and the added significance it has taken on following the rout in the fixed income market.
While Wednesday’s key daily reversal provides slight optimism for bulls, a closing break above 1.2270-1.2300 would be a bigger signal that the pair has bottomed in the near-term.
What’s more, GBP/USD has somewhat loosely followed the typical trajectory after the daily RSI closes below 20, which suggests there is a potential for further gains.
Friday’s NFP report will be a key catalyst as to whether GBP/USD can extend higher or resume its downtrend and head towards the 1.20 handle.
With the exception of ADP, which has a tenuous link at best with the NFP report, U.S. labour market indicators have come in on the strong side, raising the risk of a better-than-expected NFP print.
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