GBP/USD clings to recovery gains above 1.3150, NFP holds the key

The GBP/USD gained some traction on Friday and recovered part of previous session's BoE-led slump, closer to the 1.3100 handle.

The pair touched a session high level of 1.3164 during the early European session, albeit retreated few pips thereafter and is currently hovering around mid-1.3100s as the market now seems to have digested yesterday's perceived dovish BoE decision.

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Meanwhile, growing concerns over the US President Donald Trump's alleged links with Russia has been one of the key factors keeping a lid on any meaningful US Dollar recovery from 15-month lows and collaborated to the pair's modest recovery. 

In absence of any major market moving UK economic releases, the pair's recovery could also be attributed to repositioning trade ahead of the big event risk - the release of US monthly jobs report.

Apart from the headline NFP print, investors would also watch for wage growth numbers, which would drive inflationary expectations and eventually the Fed’s near-term monetary policy outlook. A surprisingly strong data should potentially trigger a strong US Dollar short squeeze and pave way for extension of the pair's near-term corrective slide from near 26-month highs touched earlier this week. 

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Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "the intraday outlook favors the downside, as the 20 SMA gains bearish strength above the current level, whilst technical indicators hold within bearish territory, with limited upward strength. The daily high has been set at 1.3161, now the immediate resistance and the level to surpass to reach the mentioned 1.3200."

"The weekly low at 1.3111 is the immediate support, with a break below it favoring an extension towards 1.3060  first, and 1.3020 afterwards" she added.