- The Pound Sterling slumps to near 1.3070 against the US Dollar after upbeat US NFP report for September.
- The probability of the Fed cutting interest rates by 50 bps in November has waned.
- BoE’s Bailey emphasized the need to cut interest rates aggressively.
The Pound Sterling (GBP) slides below the round-level support of 1.3100 against the US Dollar (USD) in Friday’s New York session. The GBP/USD pair extends its losing spree for the fourth trading session as market expectations for the Federal Reserve (Fed) to reduce interest rates by 50 basis points (bps) again have waned after the release of the upbeat United States (US) Nonfarm Payrolls (NFP) report for September.
The CME FedWatch tool shows that the probability of the Fed cutting interest rates further by 75 basis points (bps) by year-end has almost waned after the US NFP data release.
The official Employment report shows that the job growth remained robust in September as 254K job-seekers were hired against the estimates of 140K and the prior release of 159K, upwardly revsied from 142K. The Unemployment Rate fell to 4.1% from expectations and the prior release of 4.2%.
Meanwhile, the Average Hourly Earnings data, a key measure of wage inflation that influences consumer spending, grew by 4% in September, faster than the estimates of 3.8% and the former reading of 3.9% year-over-year. Monthly Average Hourly Earnings rose at a faster-than-expected pace of 0.4%.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.54% | 0.12% | 0.96% | 0.12% | 0.52% | 0.73% | 0.74% | |
| EUR | -0.54% | -0.41% | 0.54% | -0.40% | 0.00% | 0.20% | 0.17% | |
| GBP | -0.12% | 0.41% | 0.95% | 0.01% | 0.40% | 0.60% | 0.57% | |
| JPY | -0.96% | -0.54% | -0.95% | -0.90% | -0.51% | -0.32% | -0.33% | |
| CAD | -0.12% | 0.40% | -0.01% | 0.90% | 0.39% | 0.63% | 0.56% | |
| AUD | -0.52% | 0.00% | -0.40% | 0.51% | -0.39% | 0.21% | 0.21% | |
| NZD | -0.73% | -0.20% | -0.60% | 0.32% | -0.63% | -0.21% | -0.05% | |
| CHF | -0.74% | -0.17% | -0.57% | 0.33% | -0.56% | -0.21% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily digest market movers: Pound Sterling weakens on Middle East conflicts
- The Pound Sterling outperforms against its major peers, except North American currencies, on Friday. However, it is expected to face pressure due to tensions between Iran and Israel having converted into a full-fledged war after the assassination of Hezbollah leader Hassan Nasrallah. Oil prices have rallied amid tensions in the Middle East. Historically, a sharp rise in energy prices weighs on the currencies of those economies that rely heavily on imported oil, as it results in higher foreign outflows for them.
- Besides that, BoE Governor Andrew Bailey’s commentary on the interest rate outlook on Thursday has also dampened Sterling’s outlook. The comments from Baily in an interview with the Guardian newspaper appeared dovish as he stressed the need to cut interest rates aggressively if price pressures continue to ease. Bailey said the BoE could become "a bit more activist" and "a bit more aggressive" in its approach to lowering rates if there was further welcome news on inflation for the central bank, Reuters reported.
- In the European session, the comments from BoE Chief Economist Huw Pill also indicated that he is confident about further cuts in bank rate. However, he cautioned about risks of cutting rates either too far or too fast.
- On the economic front, the revised S&P Global/CIPS Construction PMI estimate has come in significantly higher at 57.2 unexpectedly. The Construction PMI, which gauges activities in the construction sector, was expected to have expanded at a slower pace to 53.1 from the preliminary estimates of 53.6
Technical Analysis: Pound Sterling extends downside below 1.3100
The Pound Sterling falls below the 50-day Exponential Moving Average (EMA), which stands around 1.3115, against the US Dollar. The GBP/USD extends its correction to near 1.3070 after the release of the US official employment data.
The 14-day Relative Strength Index (RSI) declines to near 40.00, suggesting a weakening of momentum.
The Cable has declined to near the trendline around 1.3060, plotted from the December 28, 2023, high of 1.2828. Earlier, the pair delivered a sharp upside move after a breakout of this line on August 21. Looking up, the 20-day EMA near 1.3234 will be a major barricade for Pound Sterling bulls. On the downside, the Pound Sterling bulls would find support near the psychological figure of 1.3000.
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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.