GBP/USD rallies past 1.2800 amid soft US NFP – by christianborjon GBPUSD Currencies Majors
, opening the door for a GBP late bounce. At the time of writing, the GBP/USD is past the 1.2800 figure, trading at 1.2845, and gains 0.83%.Key economic data from the US, particularly Nonfarm Payrolls figures for June, showed the economy adding just 209K jobs, below estimates of 225K, spurring US Dollar weakness across the board. Furthermore, the
portrayed a tight labor market, decelerating from 3.7% to 3.6% in June, while Average Hourly Earning expanded 4.4% YoY, above the prior’s month 4.2%, adding to inflationary pressures, keeping the US Federal Reserve under pressure.Nonfarm Payrolls report, the GBP/USD extended its gains past the R1 daily pivot at 1.2840. Consequently, the US Dollar Index , a measure of the performance of a basket of six currencies against the buck, falls 0.83%, down at 102.249, a tailwind for the GBP/USD.
US Treasury bond yields, mainly the 10-year Treasury note, yielding 4.042%, are almost unchanged. Although the labor market is showing signs of cooling down, traders remain certain the US Federal Reserve will increaseby 25 bps at the July 25-26 meeting, as shown by the CME FedWatch Tool. Odds are at 92.4%, higher than last week’s 86.8%. Nevertheless, they seem not convinced the Fed will hike twice, as the Fed’s dot-plot portrayed.
Given the fundamental backdrop, further GBP/USD upside is expected, but woes about a UK recession would cap the Pound Sterling uptrend. If data proves right, and the UK’s economy remains resilient, the GBP/USD could challenge the 1.3000 figure in the medium term.From a technical perspective, the GBP/USD rose to new year-to-date highs of 1.2849 after the US data release. If GBP/USD prints a daily close above 1.2850, the 1.2900 figure would be up for grabs. Further rallies could challenge the 1.
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