- GBP/USD has sensed selling pressure around 1.1100 as the risk-off tone has escalated.
- Japan-North Korea geopolitical tensions have trimmed demand for risk-sensitive assets.
- Going forward, investors will shift their focus toward the UK labor market data.
The GBP/USD pair has picked offers around the immediate hurdle of 1.1100 in the early Tokyo session. The cable is displaying signs of surrendering Friday’s low at around 1.0560 as the risk-off impulse has been heightened. Headlines from Reuters, that North Korea has apparently been conducting nuclear operation training have trimmed the demand for the risk-perceived currencies.
On Sunday, North Korea fired two ballistic missiles, making it a total of seven, launched around Pyongyang. The military event by North Korea forced Japan, South Korea, and the US to conduct their own military drills in response to military activities from the Kim Yong-un region. Adding to that, the statement from North Korean leader Kim stated that their administration need not have a dialogue with the economy and the former will continue to strengthen its nuclear operations ahead.
Apart from the geopolitical tensions, the risk-off profile has escalated after the upbeat US nonfarm Payrolls (NFP) data. The economic data landed at 263k, higher than the expectations of 250k but lower than the prior release of 315k. Apart from that, the Unemployment Rate has slipped to 3.5% vs. the projections and the former print of 3.7%. Signs of extremely tight labor market conditions will provide confidence to the Federal Reserve (Fed) to go full-armed after mounting inflation.
The upbeat US employment data pushed the US dollar index (DXY) toward the crucial hurdle of 113.00. Also, the 10-year US Treasury yields recorded four consecutive bullish trading sessions and are directed towards 4%.
It is worth noting that US markets are closed on Monday on account of Columbus Day.
On the UK front, investors are awaiting the release of the employment data. The Claimant Count Change is expected to decline by 11.4k vs. an increment of 6.3k. While the ILO Unemployment Rate is seen steady at 3.6%. As price pressures are at elevated levels in the UK economy, therefore, the Average Earnings data will also remain in focus. The economic data excluding bonuses is seen higher by 10 basis points (bps) to 5.3%.
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