GBP/USD Surges to Fresh Session High Just to Retrace Back to 1.4450

GBP/USD Surges to Fresh Session High Just to Retrace Back to 1.4450

The GBP/USD pair surged to a fresh session high of 1.4472 but retraced few pips to currently trade around 1.4450 after two US labor market indicators came-in-line with estimates. 

The ADP report show US economy added 173k new private-sector jobs during the month of May, while weekly jobless claims dropped by 1,000 to 267,000. Both the readings were broadly in-line with consensus estimates.

Meanwhile, the UK construction PMI failed to provide any cheer for sterling bulls and fell short of expectations and indicated weaker rise in business activity in the UK construction industry. The Markit/CIPS UK Construction PMI fell to 51.2 in May, from 52.0 in April marking the weakest rise in business activity in almost three years. 

Moreover, uncertainty surrounding 'Brexit' referendum on June might continue to cap near-term sharp up-move for the pair.

Later during the session, trader would turn their attention to speeches by FOMC’s Kaplan, Dudley and Powell. However, what would of keen interest for traders is the official monthly jobs reports from the US, popularly known as NFP, which would now determine the possibilities of a Fed rate-hike during its meeting on June 15.

Technical outlook

Nenad Kerkez, Analyst / Full Time Trader at Admiral Markets notes, "In the wake of major economic releases today, we can see that the GBP/USD pair is very close to critical support. Maybe it is time for a retracement. Current price action suggest a possible retracement towards 1.4540-50 zone (POC). 1.4385 is a very important support and we see a higher low compared to a previous low on 4h time frame. MACD has made a lower low and that counts as hidden bullish divergence. Additionally from L to H 1.4385 is 88.6 fib swing so that makes another confluence point. If the price retraces to POC ( L3, EMA89, 50.0) we could see initial selling again towards 1.4400-1.4385."

"It is very important for traders to see the whole picture as only if the price breaks and closes below 1.4385 we could see 1.4320 and 1.4280. For now we could see a spike up as a part of correction."