The GBP/USD surged to 1.2451 on Friday after the US Nonfarm Payrolls (NFP) report fell short of expectations. Despite a decline in the Unemployment Rate to 4%, the weaker-than-anticipated job growth fueled speculation about a delayed Federal Reserve rate cut.
The Pound Sterling (GBP) gained ground against the US Dollar (USD) on Friday following a weaker-than-anticipated US Nonfarm Payrolls report. The GBP/USD traded within a range of 1.2418 to 1.2491, ultimately settling at 1.2451, representing a 0.15% increase. The Pound's appreciation stemmed from the January US NFP data, which fell short of expectations, with the economy adding only 143,000 jobs compared to the projected 170,000. Despite this, the Unemployment Rate declined from 4.
1% to 4%, indicating a robust labor market. Furthermore, Average Hourly Earnings experienced a significant surge, suggesting sustained consumer spending.Following the data release, futures contracts tied to the Federal Reserve (Fed) funds rate indicated that market participants anticipate the Fed's first rate cut in 2025 will occur in June, aligning with the consensus following the US central bank's initial policy meeting. Meanwhile, the Pound remained largely unaffected by the Bank of England (BoE)'s decision to lower interest rates by 25 basis points on Thursday, mitigating the impact on the interest rate differential between the US and the UK. Recently, the University of Michigan reported a decline in Consumer Sentiment in its preliminary February reading, with the index dropping from 71.1 to 57.8, as predicted. Technically, the GBP/USD pair's downtrend persists, but a short-term upward movement toward the 50-day Simple Moving Average (SMA) at 1.2493 is possible. If buyers successfully breach this level, the psychological resistance at 1.2500 will come into play. The Relative Strength Index (RSI) has shown a bullish turn, suggesting potential for further gains. If GBP/USD closes above 1.2500 on a daily basis, buyers could propel the exchange rate toward its December 30 peak of 1.2607. Conversely, if GBP/USD falls below 1.2450, the next support level would be the February 6 swing low of 1.2359, followed by 1.2300.
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