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GBP/USD Trying to Build a Price Bottom ahead of the NFP Report

The GBP/USD has been consolidating. It started the year falling, but quickly turned choppy and eventually fell into consolidation even though it was able to edge out a low at about 1.4950. This week, the pair found support at 1.50 and has rallied to about 1.5250 before finding resistance during the 2/4 session.

GBP/USD Daily Chart 2/4
(click to enlarge)

The daily chart shows the market flattening within a clear downtrend. In fact, GBP/USD is now poised to find resistance in the 1.5270-1.53 area, which includes a previous resistance pivot in January and a falling trendline coming down from July 2014's high of 1.7190. 

Today, we got the ADP Non-Farm Payroll, which reported 213K jobs being added to the US economy in January, compared to the 253K reading for December. Forecasts called for a reading around 224K. Although the reading disappoint, it was not that bad.

(source: ADP, click to enlarge)

Still, if jobs data does not pick up in February, the FOMC's optimistic economic projections will be in question, and the mid-year rate hike schedule was be in doubt. 

Traders usually use the ADP as a forecast for Friday's NFP. Since it disappointed, we might expect Friday's jobs report to miss forecast as well.

US NFP (Jan.) Forecast: 231K, Previous: 252K

A reading near or below 200K should allow the GBP/USD to push at the 1.5270-1.53 area. A close above 1.53 at the end of the week would expose the next resistance levels at 1.5485 and 1.5620. With the prevailing trend still bearish, I would look for resistance here, especially if the daily RSI is around 60. 

The 1.5270-1.53 area has stronger resistance if the NFP report is above 230K. If it is above 250K, we should have a good chance of the GBP/USD retreating, in which case the 1.5135 area could be key. A break below this intra-week support pivot should return the pressure towards the 1.4950-1.50 lows.