FX.co ★ Analysis and forecast for GBP/USD on February 4, 2022

Well, as expected, following the results of yesterday's meeting, the Bank of England raised the main interest rate by another 25 basis points, from 0.25% to 0.5%. Thus, the consensus forecast regarding the rate hike by the Bank of England was justified. Wages are growing quite strongly in the UK, and one of the most effective mechanisms to stop this growth is precisely the increase in interest rates. At least, this is what the head of the Bank of England, Bailey, is focusing on. In general, what happened has passed - this is relative to yesterday's decision of the British Central Bank. I propose to dwell in more detail today on the upcoming data on the US labor market.

Many analytical departments of the largest commercial banks believe that today's labor reports from the United States will be very weak, and Nonfarm will show a significant drawdown. The main reason is a powerful wave of the omicron strain COVID-19, which negatively affected the labor market. However, this factor is considered a temporary phenomenon. Let me remind you that according to consensus forecasts, the January NFP will be 150 thousand, unemployment will remain unchanged at 3.9%, and the growth of average hourly wages will be 0.5%. I dare to assume that the US dollar is now in such a situation that the slightest deviation of the actual figures from the forecasts in the downward direction will have another very strong wave of pressure on the US currency. At least at this point, market participants do not favor the US dollar with their attention.

Daily

At yesterday's trading, the GBP/USD currency pair rose, which became quite a natural phenomenon after the British Central Bank raised the main interest rate. However, as can be seen on the daily chart, not everything is so clear, mainly since the rate increase has already been incorporated into the value of the British pound sterling. Although the pound/dollar pair managed to close yesterday's session above the orange 200 exponential moving average, bulls on the pound could not finish Thursday's trading above the important and strong technical level of 1.3600. Right now, at the moment of completion of this article, the GBP/USD pair is trading in negative territory, that is, it is declining. If the downward trend continues, the pound risks falling to the area of 1.3550-1.3520, or even to the psychological level of 1.3500. If the US labor reports bring disappointment to the market, the pair will try to continue the rise, the immediate goal of which will be yesterday's highs shown at 1.3625. In case of passing this mark, sterling will rush to the area of another landmark mark of 1.2700. In general, much will depend on the actual figures on the US labor market and the reaction of investors to them. Based on this, I consider it inappropriate to give any specific trading recommendations today.