The Pound Extends Gains Against The USD And Shows Signs Of Becoming Overbought

The GBP/USD consolidated during the Asian session Thursday, but then took off higher for the fifth session in a row once European markets opened for business. Traders remain fully bullish regarding the Pound as polls in the U.K. are forecasting an easy win for the Conservative party, which would finally put to rest most of the uncertainty surrounding the Brexit deal.

Now that the pair is trading up near the 1.3160 handle there are signs that the Pound is becoming overbought, which means traders may want to exercise some degree of caution.

Added to that is Friday’s key non-farm payrolls report, which has the potential to cause significant moves itself. In fact, a stronger than expected U.S. employment reading could cause a sharp reversal in this pair on Friday. That said, the 1.3000 level is almost certain to hold as strong support, just as it was strong resistance on the way up.

If we get a weaker than expected jobs reading on Friday the pair could move higher more quickly, putting the 1.3300 level into play. That 1.3300 level represents the March highs, which is where the 2019 selloff in the Pound began.

If U.S. jobs are weak on Friday, and the Conservatives win next week as expected, this pair could soon be on its way to test the double top highs from 2018.

Let’s also not forget about the U.S.-China trade deal, whose fortunes have shifted back and forth this week already, whipsawing markets along with the changing sentiment regarding the possibility of a trade deal getting done before the end of 2019.