- The Pound Sterling performs strongly against the US Dollar as the US labor market loses momentum.
- Investors expect the Fed to begin lowering interest rates in September.
- Economists expect that the Starmer-led Labor Party will gain an absolute majority.
The Pound Sterling (GBP) strengthens against the US Dollar (USD) and rises to near 1.2760 in Thursday’s American session. The GBP/USD jumps higheramid growing speculation that the US Federal Reserve (Fed) will start reducing interest rates from the September meeting.
According to the CME FedWatch tool, 30-day Federal Funds futures pricing data shows that the probability of rate cuts in September has increased to 72.6% from 66% recorded a week ago. Expectations for Fed rate cuts in September strengthened after a few United States (US) economic indicators showed that the labor market strength appears to have started fading and the economic health has become sluggish.
On Wednesday, the US ADP Employment data showed that labor demand in the private sector unexpectedly declined in June as the number of fresh payrolls came in lower at 150K. Market consensus showed slightly higher private payrolls at 160K than May’s reading of 157K, upwardly revised from 152K.
Meanwhile, the US service sector concluded the second quarter on a weak note as the US ISM Services Purchasing Managers’ Index (PMI) witnessed a contraction in June. The ISM Services PMI, the preferred gauge for the service sector activity that accounts for two-thirds of the economy, came in at 48.8. A figure below the 50.0 threshold is seen as a contraction in service activities. The figure was the lowest in four years.
Going forward, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for June, which will be published on Friday. The NFP report will indicate the overall labor demand and the current status of wage growth through Average Hourly Earnings data.
Daily digest market movers: Pound Sterling rises against US Dollar as UK Elections kick-off
- The Pound Sterling (GBP) exhibits a weak performance against its major peers, except the US Dollar (USD) and the Swiss Franc (CHF), in Thursday’s London session. The outlook of the British currency appears to be uncertain as market participants turn cautious, with the United Kingdom (UK) public casting votes for parliamentary elections.
- Market expectations show that UK Prime Minister Rishi Sunak-led-Conservative Party will suffer a defeat from the Keir Starmer-led-Labour Party. The latter is expected to win with an absolute majority, and its party will come into power for the first time since 2010.
- Growing speculation that the Labour Party will win at least 326 Members of Parliament (MPs) seats in the House of Commons would be favorable for the near-term outlook of the Pound Sterling. This would allow the British currency to outperform its peers where there is a high risk of political uncertainty in their respective regions.
- On the monetary policy front, investors expect that the Bank of England (BoE) will start reducing interest rates from the August meeting. The UK’s annual headline inflation has returned to the BoE’s target of 2%. Meanwhile, inflation in the service sector remains high due to steady wage growth, refraining policymakers from advocating early rate cuts.
Pound Sterling Price Today:
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
GBP | EUR | USD | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
GBP | -0.04% | 0.05% | -0.21% | -0.04% | -0.14% | -0.17% | -0.03% | |
EUR | 0.04% | 0.09% | -0.17% | -0.02% | -0.11% | -0.14% | 0.03% | |
USD | -0.05% | -0.09% | -0.26% | -0.10% | -0.21% | -0.19% | -0.11% | |
JPY | 0.21% | 0.17% | 0.26% | 0.16% | 0.04% | 0.04% | 0.17% | |
CAD | 0.04% | 0.02% | 0.10% | -0.16% | -0.11% | -0.10% | 0.01% | |
AUD | 0.14% | 0.11% | 0.21% | -0.04% | 0.11% | 0.01% | 0.13% | |
NZD | 0.17% | 0.14% | 0.19% | -0.04% | 0.10% | -0.01% | 0.12% | |
CHF | 0.03% | -0.03% | 0.11% | -0.17% | -0.01% | -0.13% | -0.12% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical Analysis: Pound Sterling climbs to near 78.6% Fibo retracement
The Pound Sterling strengthens against the US Dollar after stabilizing above the round-level support of 1.2700. The GBP/USD pair moves higher to near the 78.6% Fibonacci retracement at 1.2770, plotted from the March 8 high of 1.2900 to the April 22 low at 1.2300.
The Cable rises above the 20-day and 50-day Exponential Moving Averages (EMAs) near 1.2695 and 1.2675, respectively, suggesting that the near-term outlook is bullish.
The 14-day Relative Strength Index (RSI) rises to nearly 60.00. A decisive break above it would shift momentum towards the upside.
Economic Indicator
ISM Services PMI
The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector, which makes up most of the economy. The indicator is obtained from a survey of supply executives across the US based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that services sector activity is generally declining, which is seen as bearish for USD.
Read more.Last release: Wed Jul 03, 2024 14:00
Frequency: Monthly
Actual: 48.8
Consensus: 52.5
Previous: 53.8
Source: Institute for Supply Management
The Institute for Supply Management’s (ISM) Services Purchasing Managers Index (PMI) reveals the current conditions in the US service sector, which has historically been a large GDP contributor. A print above 50 shows expansion in the service sector’s economic activity. Stronger-than-expected readings usually help the USD gather strength against its rivals. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are also watched closely by investors as they provide useful insights regarding the state of the labour market and inflation.
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
AUD/USD: Next on the downside comes 0.6500
Further gains in the US Dollar kept the price action in commodities and the risk complex depressed on Tuesday, motivating AUD/USD to come close to the rea of the November low near 0.6500.
EUR/USD: No respite to the sell-off ahead of US CPI
The rally in the Greenback remained well and sound for yet another session, weighing on the risk-linked assets and sending EUR/USD to new 2024 lows in the vicinity of 1.0590 prior to key US data releases.
Gold struggles to retain the $2,600 mark
Following the early breakdown of the key $2,600 mark, prices of Gold now manages to regain some composure and reclaim the $2,600 level and beyond amidst the persistent move higher in the US Dollar and the rebound in US yields.
SOL Price Forecast: Solana bulls maintain $250 target as Binance lists ACT and PNUT
Solana price retraced 7% from $225 to $205 on Tuesday, halting a seven-day winning streak that saw SOL become the third-largest cryptocurrency by market capitalization.
Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out Premium
What a week – the US election lived up to their hype, at least when it comes to market volatility. There is no time to rest, with politics, geopolitics, and economic data promising more volatility ahead.
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.