GBP / USD price outlook: the volatility of the pound sterling to the US dollar depends on the Bank of England and jobless claims on the bridge
- The GBP / USD price outlook is bogged down by the bank of england meeting and initial publication of data on unemployment claims on the bridge
- The pound sterling has weakened significantly against main currencies since the beginning of the month while the GBP is pushing back lower than the BoE
- The volatility of the US dollar could accelerate if another breathtaking spike in weekly unemployment recoveries reignites the coronavirus recession problems
GBP / USD price action could steal the limelight throughout tomorrow’s trading session as market participants react to the risk of high impact event expected on economic calendar. An update from the Bank of England, as well as the weekly publication of US unemployment claims expected on Thursday 07 May are the most important.
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The BoE meeting, scheduled to start at 6:00 am GMT, will precede the US employment report expected at 12:30 pm GMT, but both have the potential to displace markets and catalyze serious currency volatility in the pound-dollar. A surprisingly accommodating The BoE meeting is expected to weigh negatively on the pound, while another historical a jobless claims report could stimulate demand for safe havens like the US dollar.
GBP / USD PRICE CHART: DAILY SCHEDULE (FROM DECEMBER 18, 2019 TO MAY 06, 2020)
GBP / USD could face increased selling pressure if any of these bearish scenarios materialize. On this note, the GBP / USD price action has fallen steadily since the beginning of May. This is due to the general weakness of the pound sterling and the strength of the US dollar, which pushed the GBP / USD to more than 200 pips below the April 30 close.
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The British pound is now slightly above the 1.2300 handle, which is a key level of technical confluence highlighted by the middle of the currency pair’s cumulative trading range since the start of the year. GBP / USD price action may find support in this area, as it is also supported by a positive sloping trend line extended by the recent series of higher lows.
GBP / USD PRICE ANALYSIS: STERLING BOOK WITH IMPLIED VOLATILITY OF THE AMERICAN DOLLAR (OVERNIGHT)
Judging by the implied volatility of GBP / USD over the next 24 hours, the cable is expected to contain a trading range of 146 pip between 1.2275 and 1.2421 on Thursday. Statistically speaking, these technical barriers support and resistance are estimated to contain one spot price action with a probability of 68%. For more information on currency volatility, find out how to trade the 10 most volatile currency pairs.
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– Written by Rich dvorak, Analyst for DailyFX.com
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