- US Durable Goods Orders for July show a significant decline of -5.2% MoM, exceeding estimates and marking the biggest drop since April 2020.
- The US labor market remains tight, with unemployment claims below estimates.
- Weak Retail Sales and PMI figures in the UK reignite recession fears, leading to adjustments in Bank of England rate hike expectations.
The Pound Sterling (GBP) drops sharply late in the New York session vs. the US Dollar (USD) and exchanges hands below the 1.2700 figure on Thursday, losing 0.85%. Federal Reserve officials hawkish stance, alongside weak economic data in the United Kingdom (UK), sponsored the GBP/USD fall, which trades at 1.2615 after hitting a high of 1.2728.
Sterling loses ground vs. the US Dollar, as Fed officials eye a longer restrictive stance as UK’s data disappoints
Two Federal Reserve officials crossed news wires as the Jackson Hole event began. Firstly, the Philadelphia Fed President Patrick Harker said the US central bank must keep its current restrictive stance while acknowledging that the economy would suffer a slowdown. After that, Boston Fed President Susan Collins expressed the Fed “may be” at a sufficiently restrictive level but kept the door open for additional hikes. She added that it’s premature to talk about rate cuts.
Data-wise, the US economic docket witnessed a slowdown in long-lasting goods, as the US Commerce Department revealed. Durable Goods Orders in July plunged by --5.2 % MoM, exceeded estimates of -4%, and trailed well below the 4.4% increase a month ago; it was the biggest decline since April 2020.
Digging into the data, excluding transportation, the reading was positive for four straight months, with orders rising 0.5% in July and up from 0.2% in June. Other data, revealed by the US Department of Labor, showed the labor market remains tight, as unemployment claims for the week ending August 19 rose by 230K, below estimates of 240K and 9K below the previous week.
Aside from this, the release of weaker Retail Sales in the UK and Wednesday’s disastrous PMI figures deepening further below the 50 lines, seen as expansion/contraction level, reignited recession fears. Hence, money market futures adjusted Bank of England’s (BoE) rate hike expectations, with most market participants expecting two additional rate hikes, as they see rates peaking at 5.75%.
Given the backdrop, the strength of the US economy can boost the Greenback’s (USD) scenario and keep the GBP/USD exchange rate downward pressured. If BoE officials give any dovish signals, expect the pair to fall towards the 200-day SMA at 1.2394.
GBP/USD Price Analysis: Technical outlook
From a technical perspective, the GBP/USD is neutral to downward biased, with the pair unable to crack the 50-day Simple Moving Average (SMA) at 1.2791, which acted as resistance. However, buyers could remain hopeful the 1.2600 level would hold unless sellers drag the major below and achieve a daily close below the latter. If the GBP/USD drops below 1.2600, the next support would be the 1.2500 mark. Conversely, the pair would remain trading within the 150 pip range of 1.2600-1.2750.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats from daily highs, holds above 1.0800
![EUR/USD retreats from daily highs, holds above 1.0800](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-59004818_XtraSmall.jpg)
EUR/USD loses traction but holds above 1.0800 after touching its highest level in three weeks above 1.0840. Nonfarm Payrolls in the US rose more than expected in June but downward revisions to May and April don't allow the USD to gather strength.
GBP/USD struggles to hold above 1.2800 after US jobs data
![GBP/USD struggles to hold above 1.2800 after US jobs data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/british-banknotes-14144912_XtraSmall.jpg)
GBP/USD spiked above 1.2800 with the immediate reaction to the mixed US jobs report but retreated below this level. Nonfarm Payrolls in the US rose 206,000 in June. The Unemployment Rate ticked up to 4.1% and annual wage inflation declined to 3.9%.
Gold approaches $2,380 on robust NFP data
![Gold approaches $2,380 on robust NFP data](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/stack-of-golden-bars-in-the-bank-vault-60756080_XtraSmall.jpg)
Gold intensifies the bullish stance for the day, rising to the vicinity of the $2,380 region following the publication of the US labour market report for the month of June. The benchmark 10-year US Treasury bond yield stays deep in the red near 4.3%, helping XAU/USD push higher.
Crypto Today: Bitcoin, Ethereum and Ripple lose key support levels, extend declines on Friday
![Crypto Today: Bitcoin, Ethereum and Ripple lose key support levels, extend declines on Friday](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/Bitcoin_2_XtraSmall.jpg)
Crypto market lost nearly 6% in market capitalization, down to $2.121 trillion. Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) erased recent gains from 2024.
French Elections Preview: Euro to “sell the fact” on a hung parliament scenario Premium
![French Elections Preview: Euro to “sell the fact” on a hung parliament scenario](https://editorial.fxstreet.com/images/Macroeconomics/Countries/Europe/Eurozone_countries/France/pantheon-paris-with-french-flag-8748101_XtraSmall.jpg)
Investors expect Frances's second round of parliamentary elections to end with a hung parliament. Keeping extremists out of power is priced in and could result in profit-taking on Euro gains.