GBP/USD slumps on strong US Nonfarm Payrolls data, bears eye 1.2500
|- GBP/USD traded volatile in the data release, though resumed its downtrend.
- US Nonfarm Payrolls figures exceeded estimates; hence traders priced out one Fed rate cut for 2024.
- Traders are eyeing the release of the University of Michigan Consumer Sentiment poll.
The GBP/USD dives 0.50% in early trading during the North American session, sponsored by news showing the economy in the United States (US) remained resilient as the workforce added more jobs than expected. At the time of writing, the major trades at 1.2505, after trading volatile within 1.2578/1.2511 at the news release.
US economy remains stronger than expected, hence the GBP/USD tumbles to new weekly lows
The US Bureau of Labor Statistics (BLS) revealed that 199K jobs were created in November, according to the Nonfarm Payrolls report. Market participants estimated a 180K increase, mainly driven by healthcare gains and auto workers. Digging into the data, the Unemployment Rate ticked lower from 3.9% to 3.7%. Average Hourly Earnings rose as the expected 4% on yearly readings, while month-over-month figures were up to 0.4% from 0.2% a month earlier.
Following the data release, trades had paired US Federal Reserve’s rate cut expectations for the following year. According to data from the Chicago Board of Trade (CBOT), 120 basis points of rate cuts are estimated, 20 bps less than a week ago.
Meanwhile, the Greenback is recovering from Thursday’s losses, as the US Dollar Index (DXY) is up by 0.50%, at 104.15. US Treasury bond yields are climbing from the short to the long end of the curve. The 10-year benchmark note rate is 4.235%, gaining eight basis points.
On the UK front, a scarce economic docket has traders awaiting the Bank of England’s (BoE) next week meeting. Economists expect the BoE to stay pat, though rate cut estimates for 2024 project 80 bps of monetary policy easing.
Ahead in the day, GBP/USD traders are eyeing the release of the University of Michigan (UoM) Consumer Sentiment poll and inflation expectations.
GBP/USD Price Analysis: Technical outlook
Friday’s price action has taken the GBP/USD near the 200-day moving average (DMA), at 1.2488, though it remains above the 1.25 figure. A decisive breach of the latter will expose the previously-mentioned support level, immediately followed by the 100-DMA at 1.2462. Downside risks will be reinforced once those two support levels are taken out, opening the door toward 1.2400. On the flip side, if buyers keep the exchange rate above 1.2500, they could threaten to regain 1.2550.
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.