- GBP/USD retreats in reaction to the positive NFP data, though it has no follow through.
- Mixed US jobs data raises uncertainty about the Federal Reserve’s next policy move.
- Risk appetite constrains the USD and supports the pair amid bets for more Bank of England rate hikes.
The pair GBP/USD It retreats from the maximum of two and a half weeks, around the 1.2545 area, reached this Friday, and continues its constant intraday decline during the first hours of the North American session. The pair dipped below the key psychological 1.2500 level, hitting a fresh daily low in reaction to mixed US jobs data, though lacking follow through and rallying a few pips in the last hour.
The US Dollar (USD) gains some positive traction in reaction to the upbeat NFP numbers and turns out to be a key factor putting downward pressure on GBP/USD. In fact, the US Bureau of Labor Statistics (BLS) reported that the economy added 339,000 new jobs in May compared to the estimate of 170,000 and the previous month’s upwardly revised reading of 294,000. However, other data revealed that the unemployment rate rose to 3.7%, compared to the forecast increase of 3.4% in April to 3.5%.
Additionally, Average Earnings Per Hour dipped to 4.3% from 4.4%, raising uncertainty about the Federal Reserve’s (Fed) upcoming policy. It’s worth remembering that markets have been pricing in the possibility of another 25 basis point hike at the June FOMC policy meeting. That said, this week a number of influential Fed officials have endorsed the idea of ​​not raising interest rates. This, along with the risk-on momentum, discourages traders from making aggressive bullish bets on the safe-haven dollar, and provides support for GBP/USD.
On the other hand, the pound sterling continues to receive support from increasing bets on further interest rate hikes by the Bank of England, bolstered by better than expected UK consumer inflation figures for May. Therefore, it is prudent to wait for strong selling before confirming that the GBP/USD’s recent rebound from 1.2300, or the 2.5-month low reached last week, has come to an end. However, the pair is on track to post strong weekly gains and break a three-week losing streak.
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.
