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The GBP/USD pair skyrockets as US Jobless Claims are seen soaring and market participants expect the US central bank to pause policy tightening. The US Treasury bond yields are pressured and the US Dollar Index collapsed by 0.73%.
The GBP/USD pair has surged due to a weakened US dollar and bets on a Bank of England rate hike. The US Department of Labor reported an increase in unemployment claims, which has led investors to expect a pause on the Federal Reserve’s hiking cycle.
The US Treasury bond yields are under pressure, with 2s and 10s losing four and eight basis points, respectively. The US Dollar Index has collapsed by 0.73%. The Pound Sterling rally overrides the US Dollar amid US jobless claims spike and Fed’s rate hike pause.
The GBP/USD pair has rallied above 1.2551 due to labor market data from the United States keeping investors expecting a pause on the Federal Reserve’s hiking cycle. The lack of catalysts or key economic data on the UK front, alongside traders betting for BoE’s additional tightening, underpins the pair. The GBP/USD trades at 1.2550 after hitting a low of 1.2429.
The Pound Sterling rally overrides the US Dollar amid US jobless claims spike and Fed’s rate hike pause. The GBP/USD pair advances aggressively following last week’s Initial Jobless Claims report. Continuing Claims dropped 37K to 1.757M in the week ending May 27th. The report justifies the Fed’s view of skipping an interest rate increase in June, though next week’s inflation report could shift expectations one day before the decision.
Money market futures estimate that the Bank of England will hike 100 bps towards the year-end. That means the Bank Rate will hit 5.50%.
On Tuesday, the UK will update the labor market status. Meanwhile, the US Consumer Price Index (CPI) will shed some light and could be viewed by Fed officials who begin the monetary policy meeting on the same day.
The GBP/USD pair has recovered from its losses and advanced comfortably above 1.2500, with buyers eyeing year-to-date (YTD) highs at around 1.2679. Technical indicators cement the case for an uptrend, with the Relative Strength Index (RSI) reaching new peaks, while the three-day Rate of Change (RoC) depicts buyers gathering momentum.
Upside risks lie at the 1.2600 figure, followed by the YTD high, ahead of the 1.2700 mark. On the flip side, the June 7 high-turned support at 1.2499 is the first support, immediately followed by the 20-day Exponential Moving Average (EMA) at 1.2450 before diving to the 50-day EMA at 1.2416.
