GBP/USD broke above a narrowing range after a weak US jobs report and a Bank of England rate hold sent the dollar broadly lower. Non-farm payrolls fell by 23,000 in July against a forecast for an 80,000 gain, while the unemployment rate still dropped to 4.1%. The pair now eyes resistance near 1.3555 if the breakout holds.
GBP/USD pushed above the upper boundary of a narrowing range, and the pair could extend toward the 1.3555 resistance level if the breakout holds. The move follows a batch of weak US labour-market data that sent the dollar broadly lower against major currencies.
Weak US jobs data hits the dollar
The US jobs report for July, released on 7 August, showed non-farm payrolls falling by 23,000 against a forecast for an 80,000 increase, while the Bureau of Labor Statistics revised down employment data for May and June. Yet the unemployment rate still fell to 4.1%, below the 4.2% consensus estimate, even as the labour-force participation rate slipped to 61.4%, its weakest level since February 2021.
Therefore the Federal Reserve faces a mixed picture: according to Danske Bank's market note, the Fed's Barkin acknowledged the labour-market weakness while pointing to still-resilient corporate earnings. The Bank of England had already kept its interest rate at 3.75% on 30 July by a six-to-three vote, with three policymakers favouring a hike, and flagged inflation risks tied to volatile energy prices.
GBP/USD breaks free of the triangle
On the charts, the pair climbed from around 1.3280 to 1.3500 in late July, then settled into a narrowing range between 1.3483 and 1.3440, a pattern resembling a contracting triangle. A green impulse candle then broke above the pattern's upper boundary, with the price attempting to hold above both the trendline and that boundary.
If the breakout fails, the point of control at 1.3465 and the lower boundary at 1.3440 would regain importance, with a support area beneath at 1.3420. Meanwhile, the RSI and moving-average indicators showed three readings of 61, 57 and 57, all above the neutral zone, while vertical volume has declined compared with the late-July impulse.
Whether the breakout holds may depend on the next round of US economic data.
Sources: ActionForex, ActionForex
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