GBP/USD outlook – Rising trend line breached ahead of employment

Resistance – 1.4441, 1.4514, 1.4549

Support – 1.44, 1.4368, 1.4330

• Cable’s breach of rising trend line on the 4-hr chart (that also includes a dip below support at 1.4441) has opened doors for a re-test of 1.44 levels.
  

• Traders should watch out for a possible rebound from 1.44-1.4412 area as that could translate into a fresh rally towards 1.45 handle.
  

• However, we maintain that a clear break above 1.4549 is needed to crowd out bear participation and that is unlikely to happen if UK employment report and wage growth figures disappoint market expectations.
  

Note – sterling has managed to stay relatively resilient despite flurry of hawkish comments from Fed officials yesterday. This makes it an ideal candidate for rally if domestic data is positive.

Labor market may show signs of stress

Employment report for the month of April may highlight subdued hiring as pointed out by monthly PMI numbers released earlier this month. As per –

Manufacturing PMI - Job cuts were reported for the fourth successive month, with the rate of decline the fastest since February 2013. Losses were mainly centered on large-sized companies.
Services PMI – Slowest rise in employment since August 2013.

Meanwhile, a slight slowdown in average weekly earnings inclusive of bonus is expected. Overall, it would take a strong employment + wage growth report to ensure cable takes out resistance around 1.4549. A horribly weak figure could open doors for a fall back to near 1.4350 levels.