- GBP/USD skyrockets as US Jobless Claims soar; investors expect Fed pause.
- US Treasury bond yields pressured, USD Index collapsed by 0.73%.
- BoE anticipated rate hike cushions GBP amid sparse economic data.
GBP/USD rallies above 1.2500 as labor market data from the United States (US) keeps investors expecting a pause on the Federal Reserve (Fed) hiking cycle. The lack of economic data to be revealed in the UK, alongside traders betting for Bank of England’s (BoE) additional tightening, underpins the GBP/USD. The GBP/USD trades at 1.2550 after hitting a low of 1.2429.
Sterling rally overrides US Dollar amid US jobless claims spike, Fed’s rate hike pause
The GBP/USD advances aggressively following last week’s Initial Jobless Claims report. The US Department of Labor revealed an increase of 261K unemployment claims, above estimates of 232K, the highest record since October 2021. Continuing Claims dropped 37K to 1.757M in the week ending May 27. The report justifies the Fed’s view of skipping an interest rate increase in June, though next week’s inflation report could shift expectations one day before the decision.
In the fixed-income sphere, US Treasury bond yields are under pressure, with 2s and 10s losing four and eight basis points, respectively, at 4.515%, and 3.716%, a headwind for the greenback. The US Dollar Index, which measures the performance of a basket of six currencies vs. the buck, collapses by 0.73%, at 103.345.
Across the pond, estimates that the Bank of England will continue to lift rates cushioned Pound Sterling (GBP) fall at the beginning of the week. Money market futures estimate the BoE will hike 100 bps towards the year-end. That means the Bank Rate will hit 5.50%.
Upcoming events.
Friday’s economic calendar is absent for both countries, but the next week, it will pick up some steam. On Tuesday, the UK will update the labor market status. Meanwhile, the US Consumer Price Index (CPI) will shed some light and could view by Fed officials, who begin the monetary policy meeting on the same day.
GBP/USD Price Analysis: Technical outlook
The GBP/USD recovered from its losses and advanced comfortably above 1.2500, with buyers eyeing year-to-date (YTD) highs at around 1.2679. Technical indicators cement the case for an uptrend, with the Relative Strength Index (RSI) reaching new peaks, while the three-day Rate of Change (RoC) depicts buyers gathering momentum. Upside risks lie at the 1.2600 figure, followed by the YTD high, ahead of the 1.2700 mark. On the flip side, the June 7 high-turned support at 1.2499 is the first support, immediately followed by the 20-day Exponential Moving Average (EMA) at 1.2450 before diving to the 50-day EMA at 1.2416.
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
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.