The Pound Sterling (GBP) has reached a five-day high near 1.3200 against the US Dollar (USD) as focus shifts to the upcoming US Nonfarm Payrolls (NFP) data. Weak US job market indicators suggest a potential impact on the labor market conditions.
The Bank of England (BoE) is expected to make a single interest rate cut for the rest of the year, adding to the market speculation.
In the European session, the GBP/USD pair consolidates as traders await the US NFP data release at 12:30 GMT. The US Dollar Index (DXY) edges below the key support level of 101.00.
Economists predict an increase of 160K new jobs in August, with a decline in the Unemployment Rate to 4.2%. Additionally, wage growth is expected to accelerate, influencing consumer spending and inflation.
The Federal Reserve (Fed) closely monitors the labor market data to determine its monetary policy. Recent poor US job market indicators have raised expectations for a significant interest rate cut from the Fed.
Market Outlook: Pound Sterling Influenced by BoE Interest Rate Path Speculation
- The Pound Sterling shows a cautious trend against the US Dollar amid speculation about the Bank of England (BoE) interest rate path. Market sentiment guides the currency’s value as investors anticipate a more gradual easing cycle compared to other central banks.
- The BoE’s decision is influenced by the UK’s economic performance and inflation levels. Strong speculation for a shallow rate cut cycle stems from positive economic indicators and high inflation in the services sector.
- Next week’s focus will be on UK Employment and GDP data, crucial factors in determining the BoE’s interest rate decision.
Technical Analysis: Pound Sterling Approaches 1.3200 Resistance Level
The GBP/USD pair nears the 1.3200 resistance level after finding support at an upward trendline. Strong buying interest and bullish short-to-long-term Exponential Moving Averages (EMAs) indicate a positive trend.
The 14-day Relative Strength Index (RSI) suggests bullish momentum, with key resistance levels at 1.3500 and 1.3640. Support levels lie at 1.3000.
Pound Sterling FAQs
- The Pound Sterling (GBP) is the oldest currency globally, accounting for a significant share of foreign exchange transactions.
- The BoE’s monetary policy decisions heavily influence the GBP value, based on inflation and interest rate adjustments.
- Economic indicators like GDP, PMIs, and employment data impact the GBP’s performance.
- The Trade Balance indicator also plays a crucial role in determining the GBP’s strength based on export-import differentials.