- GBP/USD struggles to capitalize on the previous day’s positive move to over a one-week high.
- Traders opt to move to the sidelines and look to the US monthly jobs report for a fresh impetus.
- The BoE’s bleak economic outlook favours bears and supports prospects for additional losses.
The GBP/USD pair ticks lower during the Asian session on Friday and erodes a part of the previous day's positive move to the 1.2225 region, or a one-and-half-week high. Spot prices currently trade just below the 1.2200 round-figure mark as traders now look forward to the release of the US monthly employment details for some meaningful impetus.
The popularly known NFP report is expected to show that the US economy added 180K jobs in October, down sharply from the 336K in the previous month, while the jobless rate is anticipated to hold steady at 3.8%. Apart from this, the market focus will be on Average Hourly Earnings, which are seen rising 0.3% MoM and ease to a 4% yearly rate from 4.2% in September. Federal Reserve (Fed) Chair Jerome Powell earlier this week noted that some slowing in the labour market will likely need to happen in order for inflation to continue its downward trajectory. Hence, any positive surprise could lift bets for one more rate hike by the Federal Reserve (Fed) in December or January, which, in turn, should provide a goodish lift to the US Dollar (USD) and prompt fresh selling around the GBP/USD pair.
In contrast, even a slight disappointment, especially signs of slowing wage growth, will reaffirm market expectations that the Fed is unlikely to hike interest rates any further and could possibly start cutting rates in June 2024. This could lead to a further decline in the US Treasury bond yields and undermine the Greenback. The GBP/USD pair, however, might fail to attract buyers in the wake of the Bank of England's (BoE) bleak economic outlook, saying that the economy risks falling into recession next year. The BoE did signal that it intends to keep interest rates high for an extended period to tackle stubborn inflationary pressures, though the markets have now fully priced in a 25 bps rate cut by August 2024. This suggests that any immediate market reaction to weaker US jobs data is more likely to be limited.
Nevertheless, the GBP/USD pair seems poised to register modest weekly gains, though remains confined in a familiar range held over the past month or so. The recent price action, meanwhile, might still be categorized as a bearish consolidation phase and validates a near-term negative outlook. This, in turn, suggests that the path of least resistance for spot prices is to the downside and warrants some caution before positioning for any meaningful appreciating move.
Technical levels to watch
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 below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.