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GBP/USD extended its range-bound price action following the release of US monthly jobs data.
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The USD dips in reaction to an unexpected rise in the US unemployment rate and softer wage growth.
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The markets are still expecting a 75 bps Fed rate hike in September, which limits the USD downside.
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A bleak outlook for the UK economy continues to weaken sterling and favor bearish traders.
The GBP/USD pair continues with its struggle to gain any meaningful traction and remains confined in a narrow range through the early North American session. The pair is currently placed around the mid-1.1500s and moves little following the release of the US monthly jobs report.
The slightly better-than-anticipated headline NFP print, showing that the US economy added 315K jobs in August, was offset by an unexpected rise in the unemployment rate – to 3.7% from 3.5% previous. Adding to this, Average Earnings growth slowed to 0.3% during the reported month, down notably from July’s upwardly revised 0.5%. The US dollar added to its intraday losses in reaction to the data, though hawkish Fed expectations help limit deeper losses.
Indeed, markets are still pricing in a greater possibility of a 75 bps Fed rate hike at the September policy meeting. That supports higher US Treasury bond yields, which, in turn, should help the US dollar halt its corrective pullback from Thursday’s two-decade high. Apart from this, a bleak outlook for the UK economy helps put a lid on any meaningful upside for the GBP/USD pair, at least for now.
Nevertheless, spot prices remain well within the striking distance of the lowest level since March 2020 set the previous day and seem vulnerable to sliding further. Bearish traders, however, might prefer to wait for a convincing break below the 1.1500 psychological mark before positioning for an extension of the depreciating move. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the GBP/USD pair is to the downside.
Technical levels to watch
GBP/USD
