The British pound (GBP) initially strengthened against the US dollar (USD) on Friday, but later faced a reversal during early New York trading. This turnaround followed the release of crucial economic data from the United States. The April non-farm payrolls report revealed slower job growth and weaker wage increases than anticipated, initially causing the dollar to falter. However, the dollar regained momentum after another report, the ISM's US Services Purchasing Managers' Index (PMI), unexpectedly showed an increase in services prices, indicating rising inflationary pressures in the US economy. This development raised doubts about the anticipated interest rate cuts by the Federal Reserve (Fed) in September.
The disappointing jobs report indicated that non-farm employers added only 175,000 jobs in April, significantly below the expected 243,000. Additionally, the unemployment rate rose slightly to 3.9%. Average hourly earnings, a key inflation indicator, grew at a slower pace than expected at 3.9% year-on-year, missing the anticipated 4.1% increase. Month-on-month growth also slowed to 0.2%, below the expected 0.3%.
Despite the weak US data, the GBP/USD pair failed to sustain its gains. Currently recovering from a five-month low, the pound is encountering resistance around the 1.2495-1.2520 zone, reflecting a broader downtrend since reaching a recent high of 1.2892. Technical indicators suggest a potential temporary bounce in the GBP/USD price, with the MACD indicator attempting to cross above the trigger line, and the Stochastic indicator rising after entering oversold territory. However, any upward movement may face challenges from resistance zones near 1.2520, the 20-day moving average, and the 200-day moving average, indicating a volatile near-term outlook as investors weigh conflicting factors.
The disappointing jobs report indicated that non-farm employers added only 175,000 jobs in April, significantly below the expected 243,000. Additionally, the unemployment rate rose slightly to 3.9%. Average hourly earnings, a key inflation indicator, grew at a slower pace than expected at 3.9% year-on-year, missing the anticipated 4.1% increase. Month-on-month growth also slowed to 0.2%, below the expected 0.3%.
Despite the weak US data, the GBP/USD pair failed to sustain its gains. Currently recovering from a five-month low, the pound is encountering resistance around the 1.2495-1.2520 zone, reflecting a broader downtrend since reaching a recent high of 1.2892. Technical indicators suggest a potential temporary bounce in the GBP/USD price, with the MACD indicator attempting to cross above the trigger line, and the Stochastic indicator rising after entering oversold territory. However, any upward movement may face challenges from resistance zones near 1.2520, the 20-day moving average, and the 200-day moving average, indicating a volatile near-term outlook as investors weigh conflicting factors.
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