GBP/USD plunges toward 1.1900 on US data as traders eye US NFP
|- Economic data in the United States strengthened the US Dollar vs. the Pound Sterling.
- Fed speakers remained worried about inflation, with some expecting rates at around 5% in 2024.
- GBP/USD traders are eyeing December’s US Nonfarm Payrolls data.
The GBP/USD plummets from 1.2078 daily highs toward the 1.1910s area on broad US Dollar (USD) strength triggered by solid labor market data. Wall Street is set to register losses, portraying investors’ dampened mood. At the time of writing, the GBP/USD is trading at 1.1912.
The Pound Sterling (GBP) continued to weaken as the New York session is about to end. ADP’s Employment Change report for December displayed that private hiring 234K more people than the 150K estimated, spurring speculations that Friday’s US Nonfarm Payrolls report could be the spark for a 50 bps rate hike by the Federal Reserve (Fed) on February 1.
Furthermore, the US labor department revealed that Initial Jobless Claims for the week ending December 31 dropped to 204K, lower than street analysts’ 225K mark estimates, while Continuing claims shrank to 1.694M less than the 1.708M expected.
Another reason that triggered a leg-down in the GBP/USD is Fed speaking. Kansas City Fed President Esther George said that inflation remains high and that rates need to be above 5% at least until 2024. Later, Atlanta’s Fed President Raphael Bostic stated that inflation is the biggest headwind for the US economy.
Of late, St. Louis Fed President said that it would be good for the Fed to get to a restrictive stance quickly. Bullard added that the job market remains strong and would justify Fed’s aggression. To finalize, he added that GDP is likely to moderate at a 2% pace in 2023 and that inflation would ease slower than the market’s estimates.
What to watch
Ahead into the week, with the GBP/USD pair trading at around the 1.1910s area, traders would be focused on the UK’s S&P Global/CIPS ConstructionPMI alongside the House Price Index. Regarding the United States (US) calendar, the docket will feature the US Nonfarm Payrolls report for December.
GBP/USD Key Technical Levels
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