Pound Rises, NFP Surprise Looms
The pound strengthened by around 0.12% to around US$1.3470 on Wednesday (September 5th). The GBP/USD increase occurred as the US dollar weakened for two consecutive days, influenced by weaker-than-expected employment data and improving global risk sentiment.
ADP data showed that US private employers added only 44,000 jobs in July, well below the 70,000 forecast. The June figure was also revised down from 98,000 to 95,000. The education and healthcare sectors added 36,000 jobs, while the leisure and hospitality sector lost 11,000 jobs.
However, US services activity remained quite strong. The ISM Services PMI rose slightly to 54.1 from 54.0, although below the 54.5 forecast. The employment component fell into contractionary territory at 47.4, but the prices paid index jumped to 70.3, indicating that inflationary pressures have not yet fully subsided.
In the UK, the services sector expanded again after contracting in June. The final services PMI rose to 52.1 from 48.8, supported by increased new orders and business optimism. This improvement in the UK economy provided additional support for the pound.
Market focus next turns to Friday's US Nonfarm Payrolls report. Consensus estimates an increase of around 80,000 jobs, with the unemployment rate remaining at 4.2%. The official report is scheduled for release on August 7 at 8:30 a.m. New York time (7:30 p.m. Western Indonesian Time).
Newsmaker Analysis: GBP/USD remains biased upward as long as it remains above 1.3440–1.3400. A breakout of the psychological level of 1.3500 could open the door to a move towards 1.3550–1.3600. Conversely, a stronger-than-expected NFP could revive expectations for a Fed rate hike, boost the dollar, and push GBP/USD back towards 1.3400–1.3350. (arl)
Source: Newsmaker.id
