GBP/USD Outlook: 3-Week Lows After Positive US Jobs Report

  • US nonfarm payrolls increased by 517,000 last month.
  • There is a 90% probability of a 25bps rate hike at the next Fed meeting.
  • The BoE said that UK inflation may have “turned a corner.”

Today’s GBP/USD outlook is bearish as the pound extends previous session losses. On Friday, the sterling lost ground against the dollar after a much larger-than-anticipated surge in US job growth boosted the greenback. It fueled speculation that the Federal Reserve would decide to raise interest rates further next month.

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The pound lost ground after making gains earlier in the day, dropping as much as 1% to a three-week low of $1.20.

According to the closely watched jobs report from the US Labor Department, nonfarm payrolls increased by 517,000 last month, well above forecasts for an increase of 185,000 jobs.

Managing director of public investments at Guidestone Capital Management in Texas, Brandon Pizzurro, stated that the NFP gives the Fed more fuel to continue increasing… higher and for longer.

The likelihood of a 25-basis point raise from the Fed next month is currently priced in at 90%. 

The BoE, on the other hand, said that UK inflation may have “turned a corner,” indicating that the central bank may be close to ending its tightening cycle.

On Thursday, the BoE announced its tenth consecutive rate increase, increasing the benchmark rate by 50 basis points to 4%, the highest level since 2008.

A US military fighter jet shot a suspected Chinese surveillance balloon on Saturday, raising friction between the US and China and boosting the safe-haven dollar. China claimed that the balloon strayed into the US airspace by accident.

GBP/USD key events today

Investors will pay close attention to the construction PMI data from the UK. It measures the level of activity of purchasing managers in the construction industry.

GBP/USD technical outlook: Sterling pauses in the oversold region

The 4-hour chart shows GBP/USD trading far below the 30-SMA and the RSI in the oversold region. The price made an explosive move after breaking below the 1.2274 support level, which saw the price break below the 1.2150 support. 

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Currently, the price has paused at the 1.2050 support level. Bulls have returned as the RSI crossed to the oversold region. The price will likely consolidate at this level before breaking below 1.2050 and continuing the descent.

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Source: https://www.forexcrunch.com/gbp-usd-outlook-3-week-lows-after-positive-us-jobs-report/

Source: https://webfulnet.com/

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