The short-term targets to watchLook for consolidation below recent highsU.S. labour market data is the week's highlight

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The Pound to Dollar exchange rate has had a solid run of late, rising 3.87% in November, but the first full week of the new month could be characterised by consolidation as investors await Friday's all-important U.S. jobs report.

There are no events of interest from the UK side, meaning technical considerations, momentum and U.S. data will likely hold sway over the coming days.

"Resilient trend momentum is keeping the pound somewhat better supported," says Shaun Osborne, Chief FX Strategist at Scotiabank.

Tanmay Purohit, an analyst at Société Générale, explains that GBP/USD recently broke out from a base and reclaimed the 200-day moving average.

"This has resulted in an extended bounce leading the pair towards the neckline of previous Head and Shoulders," he says.

Purohit says the daily MACD indicator has entered positive territory, denoting the regaining of upward momentum.

Above image courtesy of Société Générale.

He says the pair is likely to inch higher towards 1.2670-1.2720, which forms the 61.8% retracement of the July-October fall.

Beyond here lies the 1.2880 target, he says. To the downside, the 200-day moving average at 1.2450 should provide a downside target.

The key macroeconomic event in foreign exchange will be Friday's non-farm payroll report, which will indicate how far the U.S. labour market has 'loosened'.

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The market consensus sees a print of 175K, and should the figure undershoot this by a decent margin, then the recent selloff in the Dollar can extend as this would verify the recent rise in expectations for the number of Federal Reserve rate cuts due in 2024.

"All eyes will be on the November jobs report in the US, with the trend expected to point towards weaker hiring," says James Knightley, Chief International Economist at ING Bank.

The Dollar has fallen over the past four weeks as the market anticipates an increasing amount of interest rate cuts from the Federal Reserve in 2024. The market now anticipates more than 100bp of rate cuts; "we are looking for 150bp of cuts next year on the basis that consumer weakness will drag the US growth story much lower," says Knightley.

The market will raise expectations if U.S. labour market data comes in softer, which would weigh on the Dollar.

However, should payrolls come in stronger than expected, the market could reverse some of its recent assumptions and trigger a sizeable rebound in the Dollar.