GBP/USD remains on the defensive below 1.2750 amid firmer US Dollar
- GBP/USD trades with mild gains near 1.2725 despite the firmer US Dollar on Monday.
- The US economy created more jobs than expected in May, which dampened the expectation of Fed rate cuts in September.
- The stronger US employment report pared back Fed rate cut expectation, weighing on the Greenback.
The GBP/USD pair recovers some lost ground around 1.2725 during the early Asian trading hours on Monday. The upside of GBP/USD might be limited amid the lower bets of the US Federal Reserve (Fed) rate cuts this year after the stronger-than-expected US Nonfarm Payrolls (NFP) data. Investors will closely watch the UK employment data for May, which is due on Tuesday. On the US docket, the Consumer Price Index (CPI) and Federal Reserve (Fed) interesting that decision this week will be in the spotlight.
On Friday, the US Nonfarm Payrolls rose 272,000 in May from a 165,000 increase in April, above the market consensus of 185,000. Meanwhile, the Unemployment Rate ticked up to 4.0% in May from 3.9% in April. The Average Hourly Earnings climbed 4.1% YoY in May from 4.0% in April (revised from 3.9%), better than the estimate of 3.9%, according to the US Bureau of Labor Statistics.
The robust US employment report pared back rate cut expectations from the Federal Reserve (Fed) on Thursday. Futures traders see almost no chance of a rate cut before September, according to data from CME Group. The higher-for-longer US rate mantra is likely to support the US Dollar (USD) for the time being.
On the other hand, the UK Employment data on Tuesday, including Claimant Count Change, Employment Change, and Average Earnings data. Any signs of more layoffs could trigger the expectation of early rate cuts by the Bank of England (BoE) and undermine the Pound Sterling (GBP).
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
