The GBP/USD price tilted higher as traders refocus on the upcoming US non-farm payrolls (NFP) and the Bank of England (BOE) interest rate decision. The pair is trading at 1.3925, which is slightly higher than this week’s low of 1.3875.
BOE decision and NFP data
The BOE will start its two-day monetary policy meeting on Wednesday and publish its decision on Thursday. The decision comes at a time when the UK has removed most Covid-19 restrictions and vaccinated most of the population.
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These actions have led to a strong recovery, as evidenced by this week’s UK manufacturing PMI data. The numbers showed that the manufacturing PMI declined from 63.9 in June to 60.9 in July. While this was a decline, it was in the expansionary zone.
However, the UK is also seeing a new wave of the virus, led by the Delta variant. The country is confirming more than 20,000 new cases every day. Therefore, this trend will likely have a negative impact on the important services sector.
Analysts expect that the BOE will leave interest rates unchanged at 0.10%, where they have been in the past few months. At the same time, the bank will maintain the current pace of the 875 billion pound asset purchases program and put a wait-and-see approach. Before the new wave, many analysts were expecting the bank to signal that it will taper soon.
The GBP/USD will also react to the latest US employment numbers scheduled for the next three days. On Wednesday, ADP will publish the private payrolls data. Economists expect that these numbers will show that the economy created more than 800k jobs. On Thursday, the Bureau of Labour Statistics (BLS) will publish the latest initial jobless claims.
Finally, on Friday, the bureau will release the latest non-farm payrolls data (NFP). The data is expected to show that the economy added more than 900k jobs while the unemployment rate declined to 5.7%.
GBP/USD technical analysis
The GBP/USD price jumped to 1.3983 last week and then it pulled back to 1.3878 last week. It is trading at the 1.3925 level, which is slightly above the important resistance at 1.3900. It has also moved above the 25-day and 50-day moving averages, which is a bullish setup. The pair has also formed an inverted head and shoulders pattern. Therefore, the pair will likely break out higher as bulls target the resistance at 1.4050.
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