GBP/USD rallies sharply above 1.2070 on disappointing US Services PMI

The GBP/USD soared close to 1.50% on disappointing US ISM Services data.
Hawkish Fed speaking failed to weigh on the GBP/USD.
Next week’s economic calendar would feature UK GDP, and US CPI reports.

Christian Borjon Valencia FXStreet

The Pound Sterling (GBP) extended its gains against the US Dollar (USD), surging more than 160 pips on Friday, following a disappointing ISM Services report and an earlier jobs report. The GBP/USD Is trading at 1.2077.

US ISM Services Index plunges and weakened the USD

The GBP/USD printed another leg-up of more than 100 pips following the US Nonfarm Payrolls data release. Later, the Institute for Supply Management (ISM) revealed the Services PMI Index, which shrank to 49.6 against forecasts of 55 and trailed the November 56.5 jump. It should be said that it’s the lowest reading since May 2020, and traders should be wary that PMI readings below 50 indicate contraction.

Earlier, the US Department of Labor revealed that the US economy added more jobs than expected and that the Unemployment Rate edged lower. The report’s spotlight was Average Hourly Earning, which showed that wage inflation is easing, dropping to 4.6% YoY, below the 5.0% estimates.

Also read: GBP/USD pares Thursday losses, reclaims 1.1900 on soft USD after US NFP report

The GBP/USD extended its gains, above the 1.2050 mark, after the ISM Services PMI headline crossed newswires. The US Dollar Index, which tracks the American Dollar (USD) value against a basket of peers, plummets more than 1%, down at 104.000.

Meanwhile, further Fed speaking failed to underpin the US Dollar, as Federal Reserve Governor Lisa D. Cooks said that inflation is “far too high” and of “great concern” despite recent reports. In the meantime, Richmond’s Fed President Thomas Barkin said the Fed is still resolute on inflation and that it needs to stay on the case until inflation is “sustainably’ back to the 2% goal. He added that adopting a more gradual approach on interest rate paths should limit harm to the US economy.

UK’s next week’s calendar would feature Retail Sales, Gross Domestic Product, and the Trade Balance. On the US front, its calendar will feature the Consumer Price Index (CPI), unemployment claims, and the University of Michigan (UoM) Consumer Sentiment.

GBP/USD Key Technical Levels

GBP/USD

Overview
Today last price	1.2076
Today Daily Change	0.0166
Today Daily Change %	1.39
Today daily open	1.191

Trends
Daily SMA20	1.2119
Daily SMA50	1.1947
Daily SMA100	1.1666
Daily SMA200	1.2024

Levels
Previous Daily High	1.2078
Previous Daily Low	1.1873
Previous Weekly High	1.2126
Previous Weekly Low	1.2002
Previous Monthly High	1.2447
Previous Monthly Low	1.1992
Daily Fibonacci 38.2%	1.1952
Daily Fibonacci 61.8%	1.2
Daily Pivot Point S1	1.1829
Daily Pivot Point S2	1.1749
Daily Pivot Point S3	1.1624
Daily Pivot Point R1	1.2034
Daily Pivot Point R2	1.2159
Daily Pivot Point R3	1.2239

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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