- GBP/USD struggles to capitalize on the previous day’s positive move to over a one-week high.
- Traders opt to move to the sidelines and look to the US monthly jobs report for a fresh impetus.
- The BoE’s bleak economic outlook favours bears and supports prospects for additional losses.
The GBP/USD pair ticks lower during the Asian session on Friday and erodes a part of the previous day's positive move to the 1.2225 region, or a one-and-half-week high. Spot prices currently trade just below the 1.2200 round-figure mark as traders now look forward to the release of the US monthly employment details for some meaningful impetus.
The popularly known NFP report is expected to show that the US economy added 180K jobs in October, down sharply from the 336K in the previous month, while the jobless rate is anticipated to hold steady at 3.8%. Apart from this, the market focus will be on Average Hourly Earnings, which are seen rising 0.3% MoM and ease to a 4% yearly rate from 4.2% in September. Federal Reserve (Fed) Chair Jerome Powell earlier this week noted that some slowing in the labour market will likely need to happen in order for inflation to continue its downward trajectory. Hence, any positive surprise could lift bets for one more rate hike by the Federal Reserve (Fed) in December or January, which, in turn, should provide a goodish lift to the US Dollar (USD) and prompt fresh selling around the GBP/USD pair.
In contrast, even a slight disappointment, especially signs of slowing wage growth, will reaffirm market expectations that the Fed is unlikely to hike interest rates any further and could possibly start cutting rates in June 2024. This could lead to a further decline in the US Treasury bond yields and undermine the Greenback. The GBP/USD pair, however, might fail to attract buyers in the wake of the Bank of England's (BoE) bleak economic outlook, saying that the economy risks falling into recession next year. The BoE did signal that it intends to keep interest rates high for an extended period to tackle stubborn inflationary pressures, though the markets have now fully priced in a 25 bps rate cut by August 2024. This suggests that any immediate market reaction to weaker US jobs data is more likely to be limited.
Nevertheless, the GBP/USD pair seems poised to register modest weekly gains, though remains confined in a familiar range held over the past month or so. The recent price action, meanwhile, might still be categorized as a bearish consolidation phase and validates a near-term negative outlook. This, in turn, suggests that the path of least resistance for spot prices is to the downside and warrants some caution before positioning for any meaningful appreciating move.
Technical levels to watch
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD weighed down by China, tariffs
AUD/USD remained on the back foot, slipping back to the area of multi-year lows around 0.5950 on the back of mounting fears surrounding tariffs and their impact on the Chinese economy.
EUR/USD refocuses on 1.1000 amid tariffs jitters
EUR/USD reversed two daily pullbacks in a row an d managed to advance to the boundaries of the 1.1000 barrier on the back of fresh weakness hurting the US Dollar and persistent tariff fears.
Gold erases gains, back to the $2,980 zone
Gold prices now lose extra ground and slip back to the area of daily troughs near $2,980 mark per troy ounce following an unsuccesful attempt to maintain the trade above the critical $3,000 level earlier in the day.
RBNZ set for another interest rate cut amid trade tariff uncertainty
The Reserve Bank of New Zealand is on track to deliver a 25 basis point cut to the Official Cash Rate, bringing down the key policy rate from 3.75% to 3.50% following its April monetary policy meeting on Wednesday.
The Fed is looking at a hefty price level
We are still in thrall to tariffs, the faux-macro “data” driving markets. The WSJ editorial board advised other countries to take their tariffs to zero so that Trump’s “reciprocal” tariffs will have to be zero, too. Cute, but no cigar.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.