GBP/USD pulls back from multi-day top as traders gear up for month-start economics

  • GBP/USD awaits early-month data from the US/UK to extend the latest rise beyond eight-day high.
  • UK political plays seem to favor the PM Johnson while Brexit headlines are a few.
  • Greenback bears catch a breath after heaviest monthly declines since January 2018.

With the last month proved to be the worst for the US Dollar Index (DXY) since January 2018, greenback traders await month-start catalysts for fresh directions. In doing so, the GBP/USD pair, which rallied to the highest since October 22 the previous day, consolidates recent gains to 1.2930 by the press time of the Asian session on Friday.

The US Dollar (USD) dropped across the board on Thursday as the Federal Reserve’s third back-to-back rate cut and receding odds of any strong trade ties between the United States (US) and China joined mixed data from the US.

The British Pound (GBP), on the other hand, benefited from increasing odds of the United Kingdom’s (UK) present Prime Minister (PM) Boris Johnson to hold on to his position after a general election in December. Also increasing the pair’s strength were expectations that the UK PM has strong ties with the US and can be relied upon for good trade relations in future.

During early-day, investors stop extending the previous momentum as the month-start data flow is yet to begin while risk aversion stands tall amid the US announcing fresh sanctions on Iran and North Korea’s another round of test-firing.

Among the statistics, October month Market Manufacturing Purchasing Manager Index (PMI) from the UK and employment stats, ISM Manufacturing PMI from the US will be the key to watch. About the UK data, TD securities say, “We look for the manufacturing PMI to rise from 48.3 to 48.9 in October (mkt 48.2), supported by inventory building ahead of the (at the time of the survey) Brexit deadline of 31 October. Details will likely to continue to be soft as uncertainty drags on, and we'll be watching particularly closely to see if the labor market weakness that was highlighted in September continues into October.”

Westpac has a different story, concerning the US Nonfarm Payrolls (NFP), “US Oct non-farm payrolls are expected to increase by 85k with the General Motors strike and reduction in census workers both a drag on headline employment gains. The unemployment rate is seen to edge back up to 3.6% from a 50 year low 3.5%, and average hourly earnings growth is anticipated to stabilize at 3.0%yr after Sep’s abrupt fall to 2.9%yr from 3.2%yr in Aug.”

Technical Analysis

While 1.3000 and the previous month high around 1.3015 hold the key to pair’s rise towards May month top surrounding 1.3180, pair’s declines below June top close to 1.2780 could trigger a fresh downside.

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.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD falls amid Sino-American tensions ahead of Non-Farm Payrolls

EUR/USD is trading around 1.1850, down amid a risk-off mood stemming from President Trump's move against China's TikTok and WeChat. Tension is mounting ahead of the highly uncertain Non-Farm Payrolls.


Gold consolidates near record highs, flat-lined around $2060 area ahead of NFP

Concerns about escalating US-China tensions pushed gold to fresh record highs on Friday. A goodish pickup in the USD prompted some profit-taking amid overbought conditions. 

Gold News

GBP/USD retreats amid doubts about the furlough scheme, dollar strength

GBP/USD is struggling around 1.31 as UK Chancellor Rishi Sunak said the furlough scheme that is underpinning the economy cannot last forever. The dollar is gaining ground amid geopolitical tensions ahead of the Non-Farm Payrolls.


Forex Today: Dollar ticks up after Trump's TikTok move, all eyes on Non-Farm Payrolls

Trump's executive order against TikTok and WeChat has dampened the market mood and strengthened the dollar. Fiscal stimulus have made limited progress and investors are now focused on July NFP, which carries high uncertainty amid the resurgence of coronavirus. 

Read more

WTI drops 1% to $41.50 ahead of US NFP, rigs data

WTI (futures on Nymex) is on a steady decline so far this Friday, undermined by reduced demand for higher-yielding assets amid the renewed US-China tensions induced risk-aversion.

Oil News