FX.co ★ Breaking forecast for GBP/USD on February 6, 2023

The US Labor Department report did not meet expectations. This affected the market more than the meetings of all the central banks. Thus, the unemployment rate unexpectedly dropped to 3.4%, whereas it should have increased to 3.6% from 3.5%. What is more, the number of new jobs in the non-farm sector totaled 517 thousand instead of 190 thousand. To keep the market stable, there should be created slightly more than 200 thousand a month. In other words, the unemployment rate is likely to go on falling. Notably, it has already reached a record low. In fact, there are no doubts that the US labor market is overheated. This may seriously affect the US economy. The US Fed has only one tool to improve the situation. It should raise the key interest rate. That is why, in the best-case scenario, the US regulator will start loosening its monetary policy only in the following year. This year, we will hardly see any cut. The central bank is expected to hike the benchmark rate at least two times. Meanwhile, the European Central Bank may cut the key rate as early as this autumn. Nevertheless, today, the pound sterling may show a rebound. The US dollar has significantly appreciated in the last two days.

US Unemployment Rate

The pound/dollar pair approached the psychological level of 1.2000 amid an inertial downward movement. Since the pound sterling became oversold and approached the control level, the volume of short positions dropped. This, in turn, slackened the inertial movement.

On the four-hour chart, the RSI technical indicator confirmed the oversold conditions by its movement along level 25, which is 5 pips lower than the control line.

On the four-hour chart, the Alligator's MAs showed a downward impulse, which corresponds to the inertial movement. On the daily chart, MAs are intersected, thus signaling a slowdown in the uptrend.

Outlook

If the pair fails to break the psychological level, it may stagnate. In the best-case scenario, the level of 1.2000 will act as support. In the event of this, the price will rebound to 1.2150.

Traders will consider a continuation of the downtrend if the price settles below 1.1950 on the daily chart.

In terms of the complex indicator analysis, we see that in the short-term period, indicators are signaling a rebound amid a decline in the volume of short positions. In the intraday period, we see bearish sentiment because of the recent inertial movement.