- GBP/USD falls 0.74% to 1.2535, influenced by Powell's rate stance and strong US jobs data.
- Powell's emphasis on inflation control tempers early rate cut expectations.
- US Nonfarm Payrolls' substantial job growth supports optimism for the US economy, boosting the Dollar.
- Rising US Treasury yields post-Powell and solid economic data prompt Fed rate cut reassessment.
- UK services sector's positive start overshadowed by US monetary policy and economic outlook focus.
The GBP/USD tumbles in the mid-North American session trade with losses of 0.74% and exchanges hands at 1.2535. Factors like last Friday's US economic data and over-the-weekend comments of Federal Reserve Chair Jerome Powell keep the US Dollar bid amid a risk-off impulse.
Jerome Powell pushes back against March rate cuts
Jerome Powell commented in an interview that it is premature to consider cutting rates, highlighting that the objective of driving inflation toward its 2% goal has not been fully fulfilled. Nevertheless, he left the door open to begin easing policy toward the year's first half.
Last week the January Nonfarm Payrolls report revealed an addition of 353K Americans to the workforce, while the unemployment rate remained stable at 3.7%. This data suggests that the labor market continues to be robust, supporting the Goldilocks narrative.
Data-wise, business activity in the services sector improved, according to S&P Global and the Institute for Supply Management (ISM), after the release of January´s reports.
US Treasury yields remain high during the day and underpin the Greenback as investors re-calibrate their bets for Fed rate cuts. Last week, they estimated the Federal Funds rate (FFR) to hit 3.96%, but following over-the-weekend Powell’s remarks, they expect it to end at 4.26%. Consequently, the US Dollar Index (DXY) rises 0.44%, up to 104.42.
Other data showed that British services businesses began the year positively.
GBP/USD Price Analysis: Technical outlook
Given the fundamental backdrop, the GBP/USD has fallen below the 200-day moving average (DMA) of 1.2560, aiming to extend its losses further below the 1.2500 figure. A decisive break will expose the 100-DMA at 1.2467, followed by the 1.2400 mark. On the upside, the pair first resistance would be the 200-DMA. If cleared, the next supply zone will emerge at 1.2600, followed by the 50-DMA at 1.2675.
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 plummets to weekly lows near 1.0800 after US jobs data
EUR/USD stays under heavy pressure and trades at its lowest level in a week near 1.0800. The US Dollar continues to gather strength following the upbeat jobs data, which showed an increase of 272,000 in Nonfarm Payrolls in May, and weighs on the pair.
GBP/USD slumps below 1.2750 after encouraging US Payrolls
GBP/USD stays on the back foot and trades deep in negative territory below 1.2750 in the American session. The US Dollar outperforms its rivals following the impressive labor market data for May, forcing the pair to stretch lower heading into the weekend.
Gold falls toward $2,300 as US yields rally
Gold turned south and dropped below $2,320, erasing all of its weekly gains in the process. The benchmark 10-year US Treasury bond yield is up more than 3% on the day above 4.4% after strong US Nonfarm Payrolls data, dragging XAU/USD lower.
Bonk price approaches key reversal zone, 28% bounce likely
Bonk price crashed 30% from its recent peak and is gravitating towards a critical support zone. This correction presents a potential buying opportunity for investors anticipating a rebound and subsequent upward trend continuation for the meme coin.
GameStop stock gets slammed by early earnings release, 75 million share sale Premium
GameStop (GME) has once again rained on Keith Gill’s parade as executives disclosed a plan to sell as many as 75 million shares of the stock in at-the-market prices.