GBP/USD steadies near 1.2770 as traders await US NFP data
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The Pound Sterling (GBP) is holding its ground near 1.2770 against the US Dollar (USD) in early Friday trading, maintaining Thursday’s gains driven by weaker-than-expected US labor market data. Market participants now await the US Nonfarm Payrolls (NFP) report at 13:30 GMT, which could shape the Federal Reserve's (Fed) monetary policy trajectory ahead of its December 18 meeting.
Key Drivers Supporting GBP/USD
Weaker US Labor DataInitial Jobless Claims for the week ending November 29 increased to 224K, above market expectations of 215K, signaling potential softness in the US labor market. Investors expect today's NFP report to show an addition of 200K jobs in November, rebounding from a modest 12K increase in October. However, signs of slowing wage growth could bolster dovish Fed expectations.
BoE's Persistent Inflation ConcernsBank of England (BoE) policymakers continue to express concerns over persistent inflationary pressures. MPC member Megan Greene highlighted that UK inflation might remain above the 2% target in the medium term, citing sticky wage growth. BoE Governor Andrew Bailey echoed similar views, emphasizing that more action might be needed to firmly embed the disinflation process. Fed Rate Cut Bets
Markets are pricing a 72% probability of a 25-basis-point rate cut by the Fed this month, with the remaining 28% anticipating no change. The NFP report could either strengthen or weaken this outlook, impacting USD demand.
Technical Outlook for GBP/USD
Short-Term Moving Averages
The pair has stabilized above the 20-day EMA at 1.2715, a sign of near-term support. However, GBP/USD remains below the 200-day EMA at 1.2825, maintaining a bearish longer-term outlook.
Support Levels The 1.2500 zone, aligned with an upward-sloping trendline from March 2023, offers critical support. A breakdown below this level could expose GBP/USD to further declines.
Resistance Levels The 200-day EMA at 1.2825 is the first significant resistance, with additional hurdles near 1.2900.
Momentum Indicators The 14-day RSI has rebounded to neutral levels after turning oversold on November 22, suggesting reduced selling pressure. However, the downside bias remains intact.
Market Sentiment and Key Risks
Near-Term FocusInvestors remain cautious ahead of today’s NFP report, which will provide fresh cues on the Fed's policy path. Slower-than-expected job growth or wage inflation could weaken the USD, supporting GBP/USD. Conversely, stronger labor data might reignite USD strength, putting downward pressure on GBP/USD.
Broader Context
With no immediate UK economic releases, market speculation surrounding the BoE's December 19 policy meeting will likely continue to drive GBP sentiment. Traders expect the BoE to maintain rates at 4.75%, but persistent inflation could alter expectations.
The GBP/USD pair is currently in a consolidation phase, awaiting the outcome of the US NFP report. While near-term support at 1.2715 and resistance at 1.2825 define the trading range, directional clarity will depend on labor market data and its implications for Fed policy. For now, the pair remains anchored by mixed sentiment, with traders eyeing key economic signals to determine the next move.
Key Drivers Supporting GBP/USD
Weaker US Labor DataInitial Jobless Claims for the week ending November 29 increased to 224K, above market expectations of 215K, signaling potential softness in the US labor market. Investors expect today's NFP report to show an addition of 200K jobs in November, rebounding from a modest 12K increase in October. However, signs of slowing wage growth could bolster dovish Fed expectations.
BoE's Persistent Inflation ConcernsBank of England (BoE) policymakers continue to express concerns over persistent inflationary pressures. MPC member Megan Greene highlighted that UK inflation might remain above the 2% target in the medium term, citing sticky wage growth. BoE Governor Andrew Bailey echoed similar views, emphasizing that more action might be needed to firmly embed the disinflation process. Fed Rate Cut Bets
Markets are pricing a 72% probability of a 25-basis-point rate cut by the Fed this month, with the remaining 28% anticipating no change. The NFP report could either strengthen or weaken this outlook, impacting USD demand.
Technical Outlook for GBP/USD
Short-Term Moving Averages
The pair has stabilized above the 20-day EMA at 1.2715, a sign of near-term support. However, GBP/USD remains below the 200-day EMA at 1.2825, maintaining a bearish longer-term outlook.
Support Levels The 1.2500 zone, aligned with an upward-sloping trendline from March 2023, offers critical support. A breakdown below this level could expose GBP/USD to further declines.
Resistance Levels The 200-day EMA at 1.2825 is the first significant resistance, with additional hurdles near 1.2900.
Momentum Indicators The 14-day RSI has rebounded to neutral levels after turning oversold on November 22, suggesting reduced selling pressure. However, the downside bias remains intact.
Market Sentiment and Key Risks
Near-Term FocusInvestors remain cautious ahead of today’s NFP report, which will provide fresh cues on the Fed's policy path. Slower-than-expected job growth or wage inflation could weaken the USD, supporting GBP/USD. Conversely, stronger labor data might reignite USD strength, putting downward pressure on GBP/USD.
Broader Context
With no immediate UK economic releases, market speculation surrounding the BoE's December 19 policy meeting will likely continue to drive GBP sentiment. Traders expect the BoE to maintain rates at 4.75%, but persistent inflation could alter expectations.
The GBP/USD pair is currently in a consolidation phase, awaiting the outcome of the US NFP report. While near-term support at 1.2715 and resistance at 1.2825 define the trading range, directional clarity will depend on labor market data and its implications for Fed policy. For now, the pair remains anchored by mixed sentiment, with traders eyeing key economic signals to determine the next move.