Non-farm Payroll and GBP/USD

April 6, 2007

Non-farm payroll increased by 180K in March after a 113K gain in February. (revised from 97K). Economists had forecast a number close to 134K. Just after the release dollar started strengthening across the board , since positive NFP numbers might delay the much anticipated interest rate cut by the Federal Reserve.
However, stengthening of the dollar after the news release was somewhat limited. As far as the GBP/USD is conserned 1.9634 (61.8% fibonacci retracement Jan high, March low) proven to be a good support level. BOE did not raise rates yesterday, likelyhood of a hike at the next BOE meeting (May 10th,2007) is high, therefore the pound should strengthen
in the weeks to come, since even strong NFP reverse its bullish trend.

Today’s Strategy: Long GBP/USD at 1.9647 with a STOP at 1.9613 and Target profit at 1.9700 and 1.9742

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