Forex snapshot

The pound and euro are in demand this morning as traders focus on the headline figure from Friday’s non-farm payrolls report.

Euro and US dollar notes
Source: Bloomberg

Pound rebounds after NFP

GBP/USD has recouped it losses in overnight trading as the mixed jobs data from the US on Friday led to profit-taking on the greenback.

Going into the jobs report, sterling was sliding towards the $1.58 mark, and traders put their weight behind the figure of 214,000 (versus 235,000 expected) even though the September figure was revised higher by 8000 to 256,000.

The revision can often be more important than the headline. There is nothing to say that October’s figure won’t be revised next month, which is why I feel the jobs report was good overall and why I foresee the pound depreciating against the US dollar.

We are not expecting any major economic announcements from the UK or US so volatility is likely to be low.

The near-term target for the pound is $1.5840 and then $1.58 would be the focus for traders. Looking at the hourly chart, the pound is overbought so a move lower would not be a surprise.

To the upside, a move through $1.59 would put the 200-hour MA of $1.5971 on the radar and beyond that $1.60 would become the next stumbling block. 

Spot FX GBP/USD chart

Euro edges higher

The euro has spent most of the overnight session within the $1.2460-$1.2480 range; $1.25 seems to be out of reach for the single currency. Traders have not forgotten that Mario Draghi dropped a big hint last week about the possibility of full blown QE being introduced to re-energise the eurozone economy.

The move in EUR/USD overnight is down to US dollar weakness and should be not confused with euro strength.

The $1.2440 level is the initial target to the downside, and if that is breeched $1.24 will be the next level down to watch. On the upside, a move above $1.25 would put the pre-European Central Bank press conference level of $1.2520 in focus, and beyond that the psychological $1.26 would be the target.  

Spot FX EUR/USD chart

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