- US economic data strengthened the dollar against the pound sterling.
- Fed spokesmen remain concerned about inflation, with some expecting rates to be around 5% in 2024.
- GBP/USD traders are watching US Nonfarm Payrolls data for December.
The pair GBP/USD It plummets from 1.2078, daily highs, towards the 1.1915 zone, due to the general strength of the US dollar, caused by the solid data from the labor market. Wall Street will record losses, reflecting the bad mood of investors. At the time of writing, GBP/USD was trading at 1.1912.
The British pound (GBP) continues to weaken as the New York session draws to a close. ADP’s December employment change report showed private hiring 234,000 ahead of the 150,000 estimate, fueling speculation that Friday’s US Nonfarm Payrolls report could be the trigger. of a 50 basis point rate hike by the Federal Reserve (Fed) on February 1.
In addition, the US Department of Labor revealed that initial jobless claims for the week ending December 31 fell to 204,000, below street analyst estimates of 225,000, while continuation requests fell to 1,694 million, below the 1,708 million expected.
Another reason that caused GBP/USD to fall was the Fed’s statements. Kansas City Fed President Esther George said inflation remains high and rates need to stay above 5% at least until 2024. Later, Atlanta Fed President Raphael Bostic stated that inflation is the biggest headwind for the US economy.
Late in the day, the St. Louis Fed president said it would be a good thing if the Fed were to tighten quickly. Bullard added that the labor market remains strong and would justify the aggressiveness of the Fed. Finally, he added that it is likely that GDP will moderate at a rate of 2% in 2023 and that inflation would subside more slowly than the markets estimate.
To consider
Heading into the week, with GBP/USD trading around the 1.1910 area, traders will focus on the UK’s S&P Global/CIPS ConstructionPMI along with the House Price Index. The US will publish the non-farm payrolls for December.
GBP/USD Key Technical Levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
