GBP – Pound Sterling Tests Triangle Top

Data released on Friday showed that US job growth slowed sharply in August, with the unemployment rate rising to 4.3%, a near four-year high. This confirms weakening labor market conditions and makes a Federal Reserve interest rate cut later this month almost certain. The Bureau of Labor Statistics said nonfarm payrolls increased by only 22,000 jobs, compared to an estimate of 75,000. July's gain was revised upward to 79,000, and June's reading was revised down to a decrease of 13,000 jobs, the first decline since December 2020. Average hourly earnings rose 0.3% month-over-month and 3.7% year-over-year. The average duration of unemployment increased to 24.5 weeks, the longest since April 2022. Following the report, market expectations for a 50 basis point Fed rate cut in September rose to 10%.

The British pound rose against the weakening U.S. dollar on Friday after British Deputy Prime Minister Wilfred Wealth resigned after admitting to underpaying property taxes on new homes, a new blow to her boss, Prime Minister Stephen Smith. Technically, the GBP/USD pair is currently trading within a triangle range, having just reached the top of 1.3530 on Friday. Despite the dollar's weakness, the pound has yet to clearly break out. However, the RSI and Stochastics indicators remain upward, suggesting continued upward movement. Further resistance is anticipated at 1.3550 and possibly 1.36, levels previously encountered on July 23 and 24. Further support is anticipated at 1.37 and the July 1 high of 1.3788. Nearest support is anticipated at 1.3420 and 1.3330, with further support at 1.3280 and the May's low of 1.3137, potentially leading to the 1.30 level.

Forecast range:
Resistance: 1.3550 - 1.3600** - 1.3700 - 1.3788
Support: 1.3420 - 1.3330 - 1.3280 - 1.3137

Focus:
UK July GDP, Industrial Production, and Trade Balance on Friday (2:00 PM)

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