

GBP/USD catches a bid from bad NFP print

GBP/USD wrapped up the trading week with a last-minute win after a misfire in US Nonfarm Payrolls (NFP) kicked the Greenback lower across the board. This gave the Pound Sterling a foothold, but still ended the week lower against the USD. The Pound Sterling deflated this week after the Bank of England (BoE) delivered a widely-expected quarter-point rate cut early Thursday, while US jobs data flashed further warning signs that the US economy may be turning south quicker than investors initially expected. The latest US NFP labor data revealed that the US added 114K net new jobs in July, falling short of the expected 175K. Additionally, the previous month's figure was revised down to 179K from the initial 206K. The US Unemployment Rate also increased to 4.3%, the highest level since November 2021, while the U6 Underemployment Rate rose to 7.8% from 7.4% as employed individuals faced challenges in securing jobs with sufficient hours. Average Hourly Earnings growth slowed to 0.2% month-over-month, below the anticipated 0.3%, and the year-over-year wages growth decreased to 3.6% from the previous 3.8%. Given the generally disappointing US economic data, investors reacted by extending a two-day decline amidst increasing concerns about a potential widespread recession in the domestic US economy. This prompted a move away from risky assets and led to broad declines in equity indexes. As per the CME's FedWatch Tool, rate traders have completely priced in a rate cut in September, with a 70% chance of a double-cut amounting to 50 basis points, when the Fed announces its rate decision on September 18. Coming up next week, the US will see July’s ISM Manufacturing Purchasing Managers Index (PMI) Figures on Monday, which is forecast to increase to 51.0 MoM and cross back over into expansion territory compared to June’s contractionary 48.8. On the UK side, BRC Like-For-Like Retail Sales for the year ended in July is expected to recover to 0.3% after the previous period’s -0.5% contraction. GBP/USD technical outlook The Cable chalked in a third straight down week, falling -2.58% peak-to-trough after setting a 12-month peak of 1.3045 in mid-July. Bidders are coming out of the woodwork to keep GBP buoyed into the 1.2800 handle, but downside momentum remains strong. Price action continues to hold on the high side of the 200-day Exponential Moving Average (EMA) at 1.2645, but intraday bids are struggling to vault back over the 50-day EMA at 1.2790. GBP/USD daily chart

Learn more

Publication date:

2024-08-02 22:18:42 (GMT)

The terms and conditions of use set out below (referred to as "FX Blue's Terms"), form a contractual agreement governing FX Blue's relationship with you in relation to your use of this Website (“Agreement”) and you agree to be legally bound by FX Blue's Terms just as if you had signed this Agreement. By using this Website and any Information, you are agreeing to comply with and be bound by FX Blue's Terms, including any revisions that may be made to FX Blue's Terms from time to time. FX Blue reserves the right, in FX Blue's sole discretion, to change, modify, add or remove portions of FX Blue's Terms at any time by posting the revisions on the Website. You should check FX Blue's Terms periodically for changes as by using the Website after FX Blue posts any changes to FX Blue's Terms, you are agreeing to accept those changes, whether or not you have reviewed them, and you waive any right you may have to receive individualised notice of such changes. FX Blue's Terms may be supplemented by additional terms and conditions pertaining to specific content and activities. You agree and understand that such additional terms and conditions are hereby incorporated by reference to FX Blue's Terms. Your continued use of the Website means that you accept any new or modified FX Blue Terms.