05 February 2024, GBP/USD
Event to watch out for today:
17:00 EET. USD - ISM Service Sector Business Activity Index
GBPUSD:
The GBPUSD pair continued to decline for the second consecutive session, falling to 1.2607 during Asian trading on Monday. The Pound faces challenges as the US Dollar, as measured by the US Dollar Index (DXY), hit an eight-week high. The US Dollar has been bolstered by positive market sentiment as a March rate cut by the Federal Reserve seems unlikely. This sentiment is based on an encouraging labour market report released on Friday.
On 2 February, the US Bureau of Labor Statistics (BLS) reported that the non-farm sector added 353,000 jobs in January, beating the previous reading of 333,000 and the market consensus forecast of 180,000. Average hourly earnings (y/y) rose 4.5%, exceeding expectations of 4.1% and the previous 4.4% increase. Traders will continue to monitor economic indicators such as the ISM Services Employment Index, scheduled for release on February 5, for more information on the state of the US labour market and potential implications for monetary policy.
Bank of England (BoE) Governor Andrew Bailey avoided speculation of a rate cut and warned that price pressures could intensify again in the second half of this year. The Bank of England is prioritising managing high inflationary pressures over potentially addressing fears of a deepening recession.
Hugh Pill, chief economist at the Bank of England (BoE), said that the right moment to cut interest rates is probably not yet here. This view is based on uncertainty about the persistence of long-term inflationary pressures. Pill emphasised the need for sufficient evidence before considering a cut in the discount rate.
Trade recommendation: Sell orders at price levels below 1.2615
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