Pound Holds Back, Dollar Remains Strong—Overarching Direction Awaits US Data
GBP/USD moved relatively flat during Thursday's Asian session, holding above the 1.3400 area after experiencing significant pressure for the previous two days. Although unable to rise significantly, bullish opportunities are still considered open as long as the pair can maintain its support area and avoid extending its correction from the peak of 1.3565–1.3570 reached earlier in the week.
The main pressure comes from the US dollar, which continues to maintain its weekly gains, supported by global risk-off sentiment. When risk appetite declines, the USD, as a safe-haven asset, tends to be sought, limiting GBP/USD's upside, even as the pound's weakness begins to ease.
On the data front, mixed US economic releases have the market weighing the direction of the Fed's policy. The ISM services sector actually strengthened, with the index rising to 54.4 (from 52.6), but employment data gave conflicting signals: the ADP report showed a weaker-than-expected recovery in payrolls, and JOLTS showed job openings fell more than expected—indicating cooling labor demand.
This combination of data has kept the market's expectations of further interest rate cuts by the Fed, potentially curbing further USD strengthening. On the other hand, the Bank of England's less dovish tone—pointing to interest rates approaching a "neutral" level—supported the pound and helped limit GBP/USD's decline.
Looking ahead, with minimal significant data from the UK on Thursday, GBP/USD's movement will be highly dependent on US dollar dynamics. The market is awaiting US weekly jobless claims for a short-term trigger, but the primary focus remains on Friday's Nonfarm Payrolls (NFP), which has the potential to determine the next direction for the USD and determine major GBP/USD moves.
Key Points (5 Points):
- GBP/USD consolidated above 1.3400 after two days of pressure.
- Risk-off sentiment supported the USD and limited the pound's gains.
- US services ISM strengthened to 54.4, but employment data signaled weakness.
- Fed rate cut expectations remain; a less dovish BoE supported GBP.
- The main focus is on Initial Jobless Claims and especially Friday's Non-Farm Payrolls (NFP). (asd)
Source: Newsmaker.
