What to say about the pound ahead of the new trading week? The pound/dollar pair has been standing in one place for two weeks. Thus, we believe that the upward movement will continue almost in any case. The bears are now extremely weak, and their efforts will not be enough to block the actions of the Fed and the US government, which continue to pump their economy with money. No matter what purchases of the US currency or sales of the British currency, the pound will still grow if the money supply for the US dollar inflates before our eyes. Dollars in the world are becoming more. Thus, it is not surprising that the exchange rate of the US currency continues to decline. Therefore, in general, the situation for the pound/dollar over the past week has not changed at all. All of the major global factors are also looking north. Still, the American economy feels much better than the British one. However, it doesn't matter. There are also a huge number of geopolitical problems in the UK. However, this does not matter in the current circumstances. Therefore, we do not yet see any reason why the euro and the pound may end their ascent in the near future. Of course, this is not an argument. You should always keep track of the technical picture. It is for determining the trend that the Kijun-sen line and the Bollinger Bands indicator exist. As long as the price remains above the critical line on the 24-hour timeframe, it makes no sense to talk about a possible hike to the south.
As for macroeconomics, it has the same effect on the pound/dollar pair as it does on the euro/dollar pair. That is, almost none. There are local market reactions, such as this week after Gertjan Vliege's speech. There was not a single macroeconomic report in the UK during the entire current week, and all American statistics were ignored. Nevertheless, macroeconomics is almost the only thing that traders can rely on in their trading every day. For example, if the news calendar is empty, there is a higher probability that there will be no sudden movements during the day.
On the other hand, if the calendar is empty, then the probability of a flat is higher. We rely on the calendar of events when preparing for the new working day. Well, if the market did not react to this or that event, then it's okay. There will be several macroeconomic publications in the UK over the next week. However, almost all of them are frankly secondary. For example, on Tuesday, the business activity index for the manufacturing sector will be released on Thursday - the business activity index for the services sector. On Friday, the business activity index for the construction sector. Perhaps the price will react to these reports by 20 points. However, it is unlikely to be more than that. Bank of England Governor Andrew Bailey is also scheduled to speak on Tuesday and Thursday, which will receive increased attention after the words of Gertjan Vliege. Everyone will be waiting to see if Bailey confirms that BA is ready to raise the rate next year. They were especially considering the fact that six months ago, the Bank of England was thinking hard about lowering the rate. In the United States, on Tuesday, the potentially very important ISM index for the manufacturing sector will be released, on Thursday - the ADP report on changes in the number of employees in the private sector and business activity indices for services and manufacturing, and Friday - NonFarm, the unemployment rate and changes in average wages. From all this abundance of information, we can only single out the Nonfarm Payrolls report. The report from ADP, which is considered the second most important report after Nonfarm, which shows the labor market state, is expected to have a strong reaction every time market participants ignore it. Business activity indices are likely to remain at very high values. Thus, it is unlikely that traders will be interested in them. The level of unemployment and the level of average wages are the same.
Therefore, only NonFarm remains. According to forecasts, the number of new jobs created outside the agricultural sector will be 650 thousand in May. Recall that last month, a high Nonfarm value was also expected – almost 1 million, but instead, the figure turned out to be only 266 thousand. Thus, the main intrigue of the week is whether the second consecutive report on NonFarm Payrolls will fail. Recall that on May 7, when the previous failed Nonfarm report was released, both the euro and the pound began a new round of ascent. Then the euro rose by 100 points in the end, and the pound – by 220. Thus, NonFarm is the actual most interesting event of the week.
Trading recommendations for the EUR/USD pair:
The pound/dollar pair on the 4-hour timeframe is stuck in one place, and it seems that it needs a strong fundamental background now to move from its place. We believe that the pair will continue to move up in any case. However, a few interesting events may help it to do so next week. Of course, if the NonFarm Payrolls report turns out to be strong on Friday, then we should expect a rise in the US dollar. But until Friday, the pound will have at least four trading days. The price over the past week failed to gain a foothold below the Ichimoku cloud, so the upward trend, despite the flat of recent weeks, remains. We remind you that now the factors that support the pound are much more, and they are very strong. Thus, with a probability of 80%, the growth of the British currency will continue with the targets of the resistance levels of 1.4309 and 1.4385.
Explanation of illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.
Ichimoku indicators, Bollinger Bands, MACD.
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