It's the first Friday of a brand new month, which means new Non-Farm Payroll numbers soon to be announced.
This report continues to be interesting barometer of the recession in the US. Analysts are predicting a decrease in the amount of unemployment this month (the first figure under 200K by some estimates), following a decrease also the prior month.
During NFP there is a temporary increase in market volatility, and price can move either in the direction that would seem to be indicated by the report, or it can spike and move in the complete opposite direction as well.
Ahead of the report, let's take a look at some significant levels on the GBP/USD. Watch for breaks (and re-tests) of these levels during the spike(s) for clues as to where price is likely to go.
During the week of Aug 2, 2009, the GBP/USD had been trending down, hit the 50% weekly retracement level at 1.6839, and began moving down again. A new retracement level was reached at the 61.8& level at 1.6687 in mid-September, and price has since gone down to 138.2% at 1.5759 and is currently bouncing upward from there.
Therefore, significant levels to watch in the coming week to the upside (assuming NFP pushes us above the 1.6043 level and we find some support there) include 1.6113, 1.6332, 1.6468, and perhaps eventually 1.6578.
The present longer-term downside target remains the 161.8% level at 1.5539. However there are several levels to watch along the way, including 1.6043, 1.5946, 1.5863, and 1.5759.