Sterling still ahead of US jobs report

The pound is broadly unchanged versus the US dollar as traders await non-farm payrolls at 1.30pm (London time).

The pound is trading at $1.6577, down 0.1%, as traders wait for the most important economic update of the month for which the consensus is for an increase of 200,000 new jobs. It is not unusual for volatility to be low in the build up to the announcement but depending on how the report goes, that could all change.

During the week two members of the Federal Reserve suggested that interest rates could increase next year. The US is still operating a stimulus package and there is already talk of interest rate hikes. The US is far from standing on its own two feet, but even discussing the possibility of raising rates has pushed the US dollar higher this week.

The pound has declined against the US dollar in the past few trading sessions, and the $1.66 mark has been an important level since the start of the year in terms of support and resistance. If the jobs report is better than expected we could see the pound head towards the 100-day moving average of $1.6520. If it fails to meet expectations, the pound may pull back its recent losses and move towards the $1.6650 mark. As Chris Beauchamp highlighted, the $1.6650 region is the first resistance level of March. 

Spot FX GBP/USD chart

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