GBP/USD keeps the red near 1.3550, US Nonfarm Payrolls eyed

GBP/USD remains under mild selling pressure near 1.3550 in the European session on Friday. The US Dollar holds the upper hand amid traders' repositioning, weighing on the pair ahead of the all-important US Nonfarm Payrolls data for May. 

GBP/USD Technical Overview

GBP/USD trades above the ascending trend line and the Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60, suggesting that the bullish bias remains intact.

On the upside, 1.3590-1.3600 (static level, round level) aligns as the first resistance area. A daily close above this region could attract technical buyers and pave the way for an extended uptrend toward 1.3700 (round level, static level) and 1.3760 (upper limit of the ascending regression channel).

Looking south, support levels could be seen at 1.3540 (mid-point of the ascending channel, ascending trend line), 1.3500 (static level, round level) and 1.3450 (100-period SMA).

Fundamental Overview

The renewed selling pressure surrounding the US Dollar (USD) helped GBP/USD gain traction on Wednesday.

Ahead of Friday's highly-anticipated Nonfarm Payrolls data, the disappointing private sector employment reading, which showed an increase of 37,000 in May, weighed on the USD on Wednesday. Moreover, the Institute for Supply Management (ISM) reported that the Services Purchasing Managers Index (PMI) fell into the contraction territory at 49.9 in May from 51.6 in April. This reading came in below the market expectation of 52.

In the second half of the day, weekly Initial Jobless Claims data from the US will be watched closely by market participants. Investors expect the number of first-time applications for unemployment benefits to edge lower to 235,000 in the last week of May from 240,000. In case there is a noticeable decline in this data, with a reading below 220,000, the USD could stay resilient against its rivals and limit GBP/USD's upside. Conversely, a disappointing print at or above 240,000 could open the door for another leg higher in the pair.

Investors will also pay attention to the European Central Bank's (ECB) policy announcements. A dovish ECB tone could trigger capital outflows out of the Euro into Pound Sterling. In this scenario, GBP/USD could push higher even if the data releases from the US seem USD-positive at first.