GBP/USD clings to gains near mid-1.27s, looks to snap 4-week losing streak
- The dismal employment data from the U.S. weigh on the greenback.
- US Dollar Index drops to multi-month highs below 97.
- GBP/USD adds more than 100 pips for the week.
The GBP/USD pair gained traction in the second half of the day on Friday amid broad-based USD weakness and reached its highest level since May 21 at 1.2760. As of writing, the pair was up 0.45% on a daily basis at 1.2755.
The U.S. Bureau of Labor Statistics today reported that nonfarm payrolls in the U.S. rose by 75,000 in May to miss the analysts' estimate of 185,000 by a wide margin. Moreover, April's reading got revised down to 224,000 from 263,000 and the wage inflation, as measured by the average hourly earnings, fell to 3.1% on a yearly basis in May. With these figures ramping up the expectations of the Fed going for more than rate cuts in the remainder of the year weighed on the greenback.
- Citi sees Fed lowering interest rates 50 bps in September - Reuters.
The US Dollar Index, which spent a large portion of the day above the 97 mark, turned south in the NA session and slumped to a 10-week low of 96.46. At the moment, the index is down 0.5% on the day at 96.50.
Commenting on the jobs report, “Today’s numbers – together with the weak ISM manufacturing earlier this week – will add to the pressure on the Fed to deliver the first cycle cut in a not too distant future,” Nordea Markets analysts said.
Meanwhile, British Prime Minister Theresa May announced her resignation. The 1922 Committee in a press release said that nominations to stand for election as the Party leader will close at 5 PM on Monday.
Technical outlook