GBP/USD declines towards 1.2400 as geopolitical tensions dampen market mood, US NFP eyed

GBP/USD is eyeing more weakness to near 1.2400 amid a dismal market mood.
China’s retaliation over arms support to Taiwan by the US might result in some restrictions on exports from China to the US.
Scrutiny of US ADP Employment data is indicating a slowdown in the labor market ahead.

Sagar Dua FXStreet

The GBP/USD pair is hovering near Wednesday’s low at 1.2440 in the Asian session. The Cable is expected to extend its downside journey as geopolitical tensions between the United States and China over Taiwan have dampened the overall market mood. China’s retaliation over arms support to Taiwan by the US might result in some restrictions on exports from China to the US.

S&P500 futures have generated decent losses in the Asian session, continuing its two-day losing streak amid deepening fears of a recession in the US economy. After five straight months of contraction in the US manufacturing sector, the weaker-than-anticipated US Services PMI has strengthened signs of a slowdown. Fortunately, the US Services PMI has not fallen into a contraction trajectory yet.

US-China tensions have improved the safe-haven appeal of the US Dollar Index (DXY) firmly. The USD Index has shifted its auction above 102.00 and is expected to extend gains ahead. The demand for US government bonds is recovering in hopes that the Federal Reserve (Fed) will consider an early pause to the policy-tightening spell. This has eased some recovery in the 10-year US Treasury yields and has pushed them below 3.30%.

As per the CME Fedwatch tool, the chances for a steady Fed interest rate decision are sticky above 50%.

Going forward, the release of the US Nonfarm Payrolls (NFP) data will provide clarity over the labor market condition. Scrutiny of US Automatic Data Processing (ADP) Employment data is indicating a slowdown in the labor market ahead.

On the Pound Sterling front, Bank of England (BoE) policymakers’ anticipation that United Kingdom inflation will start declining quickly looks vague. There are no signs that UK inflation has started softening, however, a fresh jump in oil prices is expected to put more burden on households.

GBP/USD

Overview
Today last price	1.2444
Today Daily Change	-0.0018
Today Daily Change %	-0.14
Today daily open	1.2462

Trends
Daily SMA20	1.2248
Daily SMA50	1.2155
Daily SMA100	1.2148
Daily SMA200	1.1899

Levels
Previous Daily High	1.2514
Previous Daily Low	1.2433
Previous Weekly High	1.2424
Previous Weekly Low	1.2219
Previous Monthly High	1.2424
Previous Monthly Low	1.1803
Daily Fibonacci 38.2%	1.2464
Daily Fibonacci 61.8%	1.2483
Daily Pivot Point S1	1.2425
Daily Pivot Point S2	1.2388
Daily Pivot Point S3	1.2344
Daily Pivot Point R1	1.2506
Daily Pivot Point R2	1.2551
Daily Pivot Point R3	1.2588

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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