- The GBP/USD soared close to 1.50% on disappointing US ISM Services data.
- Hawkish Fed speaking failed to weigh on the GBP/USD.
- Next week’s economic calendar would feature UK GDP, and US CPI reports.
The Pound Sterling (GBP) extended its gains against the US Dollar (USD), surging more than 160 pips on Friday, following a disappointing ISM Services report and an earlier jobs report. The GBP/USD Is trading at 1.2077.
US ISM Services Index plunges and weakened the USD
The GBP/USD printed another leg-up of more than 100 pips following the US Nonfarm Payrolls data release. Later, the Institute for Supply Management (ISM) revealed the Services PMI Index, which shrank to 49.6 against forecasts of 55 and trailed the November 56.5 jump. It should be said that it’s the lowest reading since May 2020, and traders should be wary that PMI readings below 50 indicate contraction.
Earlier, the US Department of Labor revealed that the US economy added more jobs than expected and that the Unemployment Rate edged lower. The report’s spotlight was Average Hourly Earning, which showed that wage inflation is easing, dropping to 4.6% YoY, below the 5.0% estimates.
Also read: GBP/USD pares Thursday losses, reclaims 1.1900 on soft USD after US NFP report
The GBP/USD extended its gains, above the 1.2050 mark, after the ISM Services PMI headline crossed newswires. The US Dollar Index, which tracks the American Dollar (USD) value against a basket of peers, plummets more than 1%, down at 104.000.
Meanwhile, further Fed speaking failed to underpin the US Dollar, as Federal Reserve Governor Lisa D. Cooks said that inflation is “far too high” and of “great concern” despite recent reports. In the meantime, Richmond’s Fed President Thomas Barkin said the Fed is still resolute on inflation and that it needs to stay on the case until inflation is “sustainably’ back to the 2% goal. He added that adopting a more gradual approach on interest rate paths should limit harm to the US economy.
UK’s next week’s calendar would feature Retail Sales, Gross Domestic Product, and the Trade Balance. On the US front, its calendar will feature the Consumer Price Index (CPI), unemployment claims, and the University of Michigan (UoM) Consumer Sentiment.
GBP/USD Key Technical Levels
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 stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.