FX.co ★ Analysis and forecast for GBP/USD on May 5, 2021

The pound/dollar currency pair was trading quite volatile at yesterday's trading and changed its price dynamics during the daily session. It can be assumed that the PMI manufacturing activity index for the UK published yesterday, which turned out to be better than economists' expectations, provided a strong rebound for the British pound after the GBP/USD fell to 1.3837. Today, in the absence of statistics from the United Kingdom, investors will focus on the US employment data from ADP and the index of business activity in the service sector from the Institute for Supply Management (ISM). However, the main events for GBP/USD are scheduled for the last two days of the current five-day trading period. Let me remind you that tomorrow, following the results of its next meeting, the Bank of England will decide on interest rates, the volume of the asset purchase program and publish an accompanying statement. On Friday, the week will be crowned by the most important labor reports from the United States for the past month for market participants. Well, now it's time to move on to the consideration of price charts.

Daily

After a decline to 1.3837, where the blue Kijun line passes, the rate gained strong support and made an impressive rebound up, as a result of which a very long lower shadow appeared at the candle for May 4. Usually, the factor of the appearance of such shadows demonstrates the unwillingness of the market to decline. It confirms the current growth of the quote and the update of yesterday's maximum values at 1.3911. At the time of writing, the GBP/USD pair has already been at 1.3913. However, it has not yet been able to gain a foothold above the strong and important technical level of 1.3900, and right now, it is trading directly below this significant mark. Although the most important events for GBP/USD are still ahead, I believe that today's closing price will clarify the situation and market sentiment. The closing of trading above yesterday's highs of 1.3911 will indicate the market's desire to move in the north direction, which will lead to another attempt to pass the key resistance zone of 1.4000-1.4015 at the moment. However, one desire will not be enough. A lot will depend on the reaction of market participants to the Bank of England meeting results, as well as on Nonfarm Payrolls, which will be published this Friday.

H4

This chart clearly shows that at the end of this article, the pair is trading in a relatively narrow trading range of 1.3800-1.3930, which is quite understandable on the eve of the release of these events. Investors are in no hurry to open new positions on this trading instrument, and they can be understood. Since the pound/dollar is trading above the used moving averages of 50 MA, 89 EMA, and 200 EMA, each of them can provide significant support to the price. The 50 simple moving average is doing it right now, which is ready to repel the attacks of the bears and turn the course up. However, it is not a fact that the players will increase the rate of a true breakdown of the strong technical level of 1.3930. If attempts to break through this mark are unsuccessful, and a reversal bearish candle (or candles) appears on this or hourly charts, this will be a signal to open sales with the nearest target in the area of 1.3820-1.3800. Based on this assumption, it is in this area that I propose to consider opening deals to buy. Earlier purchases are considered from the price zone of 1.3875-1.3840.