Sterling targets 50-DMA
GBP/USD has been trading sideways overnight as the surge in sterling has been stopped in it tracks by the 50-day moving average. The pound is at a crossroads with the dollar as the downward trend is still in pace, but a confident move through the 50-DMA will give the pound some much needed confidence.
The market will be subdued in the run up to the US jobs report, and the market consensus is for 230,000 jobs and unemployment to remain at 5.6%. Market volatility will be high immediately after the announcement, but when the dust settles the participation rate and revision to previous months will provide a clearer picture of the US jobs market.
The pound has made a good recovery against the dollar, but the jobs report will be the acid test. The 50-DMA at $1.5323 is acting as an anchor, and if the metric is cleared it will become a crucial support level for the new target of $1.54. A move back below the 50-DMA will reinstate its position as resistance, and the downside support at $1.52 will be brought into play.