GBP/USD: Nonfarm Payrolls to punch a powerless sterling

GBP/USD has been falling sharply after the Fed's Powell shrugged off rising bond yields. US Nonfarm Payrolls are set to rock markets, brushing aside UK developments, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“Jerome Powell, Chairman of the Federal Reserve, said that the rapid rise in bond yields has ‘caught my attention’ – but nothing else. Otherwise, he stuck to the script of dismissing prospects of rising inflation, saying that the Fed eyes various measures of financial conditions and stressing that ten million Americans remain out of work. 

“While markets continue digesting Powell's reluctance to help, they will have to quickly shift to the NFP. The economic calendar is pointing to an increase of 182,000 positions in February, while several leading indicators such as ADP's labor figures and the ISM Services Purchasing Managers' Index point to even lower results. That means a minor beat would be sufficient to boost the greenback even further.”

“The Senate continues discussing President Joe Biden's now-modified covid relief package. While the total bill will fall short of $1.9 trillion, it would serve as a boost to the economy.” 

“The pound remains supported via the vaccination campaign – nearing a third of all Brits – and the upbeat forecasts in the budget. However, while sterling has room to rise against many other currencies, it seems powerless against the dollar.”