GBP/USD Forecast: US GDP and Jobs Data Boost Dollar

• The British pound initially tried to rally during the trading session on Thursday but gave back gains as we plunged below the 1.34 level.
• After that, the market broke down to the 1.3340 level at the time of writing, and it’s worth noting that it was the most recent swing low.
• While I don’t necessarily know that the British pound is going to collapse from here, it certainly looks like it is starting to struggle, and I think we have a situation where the US dollar is starting to flex its muscles.

US GDP

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The US Final GDP quarter over quarter came in at 3.8%, hotter than the anticipated 3.3%. Furthermore, the Unemployment Claims number came out at 218,000 for the previous week, lower than the expected 233,000. In other words, the US economy is doing better than a lot of people started to think, and this could have a major influence on what the Federal Reserve does next. If the Federal Reserve does in fact see a situation where the economy is doing fairly well, this means that they may not be as quick to cut rates.

If we were to break down below the 1.32 level, then it’s likely that the market will really start to fall apart, perhaps reaching the 1.30 level, maybe even the 1.28 level over the longer term. On the other hand, if we turn around and break above the top of the candlestick for the trading session on Thursday, that would be a nice turnaround and could send this market toward the 1.36 level. In other words, we are close to an area that we will have to make a bigger decision from, but right now it certainly looks like the US dollar is fighting back, and if that is going to be the case, I think you get a situation where the British pound might be suffering due to that strength. Keep in mind that the British pound has been stronger than most other currencies against the US dollar, so if this currency pair starts to fall apart, it could be a major signal that the US dollar is going to strengthen against everything else.

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