Forex: GBP/USD retraces yesterday’s losses ahead of US NFP

FXstreet.com (Barcelona) - With the US nonfarm payrolls report ahead, the GBP/USD had some more strength left to push higher, back to 1.5570 in order to fully retrace yesterday’s gains. However, profit taking has made the pair pull back a little. Earlier, the market had moved higher on the release of better than expected UK Markit Services PMI, up from 52.4 to 52.9 in April, instead of staying unchanged as expected.

In regard to the US nonfarm payrolls, investors will be very serious about April data after a weak figure in March and this week’s disappointing ADP employment report. “Consensus forecasts at 145k drifted lower after the ADP report of 119k and our standing estimate of 162k looks admittedly toppish. Even if we are right, it would still represent a deceleration in job growth. The jobs number will be weaker than recent trends, even if odds favor a bounce higher in April”, wrote TD Securities analyst Alvin Pontoh, expecting the unemployment rate to remain unchanged at 7.6%, (7.57%) but the risk is tilted higher.

Commerzbank analysts favor failure at 1.5600. “Loss of the 1.5412 mid-April peak is needed to alleviate immediate upside pressure and signal a slide back to the 1.5286 uptrend line”, wrote analyst Karen Jones, adding that in case the GBP/USD extends above 1.5600, the pair should cap at 1.5760/82 (200 day ma and 61.8% retracement).