10 June 2024, GBP/USD
GBPUSD:
The GBP/USD pair is recovering lost ground around 1.2725 in the early hours of Asian trading on Monday. GBP/USD growth may be limited amid bets on a US Federal Reserve (Fed) rate cut this year following stronger-than-expected US Non-Farm Payrolls (NFP) data. Investors will be keeping a close eye on UK employment data for May, due for release on Tuesday. In the US, the focus will be on the Consumer Price Index (CPI) and on the decisions of the Federal Reserve (Fed) due this week.
On Friday, US non-farm payroll employment data rose by 272,000 in May after an increase of 165,000 in April, exceeding the market consensus forecast of 185,000. Meanwhile, the unemployment rate increased to 4.0% in May from 3.9% in April. Average hourly earnings rose 4.1% in May, up from 4.0% in April (revised from 3.9%), exceeding the 3.9% forecast by the US Bureau of Labour Statistics.
The robust US jobs report dampened expectations of a rate cut by the Federal Reserve (Fed) on Thursday. Futures traders anticipate a low probability of a rate cut before September, according to CME Group data. The ‘raise rates longer’ mantra is likely to support the US Dollar (USD) for the time being.
Conversely, on Tuesday, the UK will release employment data, including the change in the number of benefit claimants, the employment rate change, and average earnings data. Any indications of an increase in layoffs could prompt expectations of an imminent rate cut by the Bank of England (BoE) and negatively impact the value of the pound.
Trading recommendation: Trading mainly by Sell orders from the current price level.
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