Pound Sterling Tumbles Against US Dollar After Strong US NFP Report
Market Movers: Stronger US Jobs Data Impacts Rate Cut Expectations
The robust NFP report, indicating a resilient labor market despite the Federal Reserve's restrictive monetary policy, has dampened expectations of early interest rate cuts. Market sentiment has shifted, with the probability of a September rate cut now estimated at 54%, down from 68% before the report's release.
In contrast, recent indicators like the JOLTS Job Openings and ADP Employment Change reports had suggested a softening labor market, leading to speculation of earlier rate cuts. However, the strong NFP data has countered this narrative.
Focus Shifts to UK Employment Data
Attention now turns to the upcoming UK employment data for the February-April period, due on Tuesday. A continued decline in employment figures could weigh on the Pound Sterling, potentially fueling expectations of early rate cuts by the Bank of England. Additionally, investors will closely monitor UK Average Earnings data, as strong wage growth has been a key contributor to persistent service inflation.
Technical Analysis: GBP/USD Breaks Below Key Fibonacci Level
The GBP/USD pair experienced a sharp drop below the 78.6% Fibonacci retracement level at 1.2770, signaling a shift in near-term sentiment towards volatility. However, the pair maintains a bullish trajectory overall, with the 20-day and 50-day Exponential Moving Averages (EMAs) at 1.2710 and 1.2650, respectively, still trending upwards.
The Relative Strength Index (RSI) has retreated to the 40.00-60.00 range, indicating a fading of the recent bullish momentum.