GBPUSD, Silver Outlook: Non-Farm Payroll Week

Key Events for the Week Ahead

• US ISM Manufacturing PMI on Tuesday
• JOLTS Job Openings on Wednesday
• ADP Non-Farm Employment Change on Thursday
• US Unemployment Claims on Thursday
• US ISM Services PMI Thursday
• Non-farm Payrolls on Friday (High volatility is expected)

US Employment Indicators

The first week of the rate cut month is enriched with key US labor market data which is widely expected to affect the upcoming Fed rate cut magnitude this month, and consequently, the trends of the broader market.

Earlier views on employment change are set to be reported on Wednesday and Thursday with JOLTS Job Openings and ADP Non-Farm Employment Change, leading up to the highest share of volatility for the week with the non-farm payrolls on Friday.

Leading US Economic Activity Indicators

Beyond employment indicators, key US economic activity indicators will also be released, including the US ISM Manufacturing PMI on Tuesday and the US ISM Services PMI on Thursday. These reports are likely to affect broader market sentiment alongside employment data, particularly as the manufacturing sector continues to struggle below the 50-expansion mark, while the services sector contributes to positive inflation trends.

The expected volatility in the US Dollar this week is likely to influence the GBPUSD and Silver charts. The US Dollar index's ongoing positive rebound from December 2023 lows has driven corrective trends in both GBPUSD and Silver.

Technical Outlook

GBPUSD, Silver Outlook: GBPUSD – Weekly Time Frame – Log Scale

Source: Tradingview

Given the breakout from a 15-year consolidation, analyzing the pound from a weekly time frame makes more sense. The current corrective phase from the 1.3266 high is finding short-term support at the lower end of the 1.31 range.

The next stronger support level to watch is the top of the trendline connecting consecutive lower highs between 2014 and 2021, located between 1.3030 and 1.2970. From the upside, if the pound resumes its breakout, the next key level to watch is the 1.34.50-1.35 zone as it aligns with the lows of 2009.

The high probability scenarios will likely be allocated in the direction of the upcoming monetary policies this month, given no priced in affects.

GBPUSD, Silver Outlook: XAGUSD – Daily Time Frame – Log Scale

Source: Tradingview

Following the positive bounce of the US Dollar index, silver dipped back below its primary uptrend and is currently facing a strong support zone at the bottom end of the 28 range, with an expected rebound from the 27.80 level. If bearish momentum persists below the 27.80-mark, Silver is expected to realign with levels 27.20 and 26.40 respectively.

On the upside, the lower boundary of silver’s primary up trending channel at the 29 level is likely to serve as the first resistance as the metal attempts to rebound. A close back above its primary uptrend could realign silver with resistance levels at 29.70, 30.20, and 30.80, in line with the trendline connecting the consecutive lower highs from May 2024 to July 2024.

--- Written by Razan Hilal, CMT on X: @Rh_waves