- GBP/USD edges lower in reaction to the upbeat headline NFP print, albeit lacks follow-through.
- The mixed US jobs data adds to uncertainty over the next policy move by the Federal Reserve.
- The risk-on impulse to cap the US and lend support to the pair amid bets for more BoE rate hikes.
The GBP/USD pair pulls back from a two-and-half-week high, around the 1.2545 region, touched this Friday and extends its steady intraday descent through the early North American session. Spot prices slip below the 1.2500 psychological mark, hitting a fresh daily low in reaction to the mixed US employment details, albeit lacks follow-through and recovers a few pips in the last hour.
The US Dollar (USD) gains some positive traction in reaction to the upbeat headline NFP print and turns out to be a key factor exerting downward pressure on the GBP/USD pair. In fact, the US Bureau of Labor Statistics (BLS) reported that the economy added 339K new jobs in May as compared to the 170K estimated and the previous month's upwardly revised reading of 294K. Additional details, however, revealed that the Unemployment Rate, meanwhile, rose to 3.7% as compared to an expected uptick to 3.5% from 3.4% in April.
Furthermore, Average Hourly Earnings, edged lower to 4.3% from 4.4%, further raising uncertainty over the Federal Reserve's (Fed) next policy move. It is worth recalling that the markets have been pricing in the possibility of another 25 bps lift-off at the June FOMC policy meeting. That said, a slew of influential Fed officials this week backed the case for skipping an interest rate hike. This, along with the risk-on impulse, holds back traders from placing aggressive bullish bets around the safe-haven buck and lends support to the GBP/USD pair.
The British Pound, on the other hand, continues to draw support from rising bets for additional interest rate hikes by the Bank of England, bolstered by stronger-than-expected UK consumer inflation figures for May. This makes it prudent to wait for strong follow-through selling before confirming that the GBP/USD pair's recent bounce from the 1.2300 mark, or a two-and-half-month low touched last week has run its course. Nevertheless, spot prices remain on track to register strong weekly gains and snap a three-week losing streak.
Technical levels to watch
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