- Sterling maintains recent gains near 1.2770 against the dollar ahead of November US labor market data due at 13:30 GMT.
- Investors expect the Fed to cut interest rates by 25 basis points at its December 18 policy meeting.
- BoE hawkish Megan Greene warned on Thursday that UK inflation could remain above the 2% target in the medium term.
The pound sterling (GBP) performed strongly against its main competitors on Friday, after Bank of England (BoE) officials raised concerns about continued price pressure. Megan Greene, an external member of the BoE’s Monetary Policy Committee (MPC), said on Thursday that UK inflation could stay above the 2% target over the medium term as it becomes “broadly more sustainable,” Bloomberg reports.
Megan Green’s doubts that the central bank will bring inflation into the desired range are supported by the assumption that wage growth will remain sustainable. “Wage growth is not coming down as fast as I would like,” Greene said.
On Wednesday, BoE Governor Andrew Bailey also stressed that the central bank still had work to do to bring inflation below its 2% target, but expressed confidence that the disinflation process was well-entrenched.
With critical UK economic indicators missing in the near term, market speculation about the BoE’s likely interest rate decision at its December 19 monetary policy meeting will weigh on the valuation of sterling. Traders expect the BoE to leave interest rates unchanged at 4.75%.
PRICE OF THE British Pound today
The table below shows the current percentage change of the British Pound (GBP) against the major listed currencies. The British pound was strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | -0.07% | 0.35% | 0.10% | 0.46% | 0.66% | -0.11% | |
| EUR | -0.05% | -0.11% | 0.30% | 0.05% | 0.42% | 0.62% | -0.16% | |
| GBP | 0.07% | 0.11% | 0.38% | 0.16% | 0.53% | 0.72% | -0.03% | |
| JPY | -0.35% | -0.30% | -0.38% | -0.22% | 0.14% | 0.31% | -0.42% | |
| BOOR | -0.10% | -0.05% | -0.16% | 0.22% | 0.37% | 0.56% | -0.19% | |
| AUD | -0.46% | -0.42% | -0.53% | -0.14% | -0.37% | 0.19% | -0.56% | |
| NZD | -0.66% | -0.62% | -0.72% | -0.31% | -0.56% | -0.19% | -0.75% | |
| CHF | 0.11% | 0.16% | 0.03% | 0.42% | 0.19% | 0.56% | 0.75% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select British Pound from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily Market Change Summary: Pound Sterling Maintains Gains Against US Dollar Ahead of US NFP
- During European trading hours on Friday, sterling held its gains near 1.2770 against the US dollar (USD). GBP/USD rose sharply on Thursday after the release of United States (US) preliminary jobless claims data for the week ending November 29, which showed the number of people claiming unemployment benefits for the first time rose to 224,000. compared to estimates and the previous weekly reading of 215,000.
- Cable is expected to be frail ahead of the release of US nonfarm payrolls (NFP) data for November at 13:30 GMT. Investors will be paying close attention to official U.S. labor market data for up-to-date information on whether the Federal Reserve (Fed) will cut interest rates at its December 18 policy meeting. The Fed began its easing cycle in September amid concerns among officials about deteriorating labor demand and they were confident inflation would return to the bank’s 2% target.
- Economists expect the US economy to have hired 200,000 people. up-to-date employees, which is much more than an escalate of 12 thousand recorded in October. Wage growth was much lower last month as some industries were hit by hurricanes and workers struck at Boeing factories. The unemployment rate is estimated to have increased to 4.2% from 4.1%.
- Investors will also pay attention to data on average hourly earnings, a key measure of wage growth, which is expected to rise 3.9% year-over-year, slower than 4% in October. On a monthly basis, the measure of wage growth is estimated to have increased at a slower rate of 0.3% compared to the previous reading of 0.4%.
- Signs of slowing labor demand and moderate wage growth will reinforce the dovish stance of the Federal Reserve (Fed) ahead of its policy meeting scheduled for December 18. On the contrary, sturdy labor market data will weaken them. There is currently a 72% chance the Fed will cut interest rates by 25 basis points (bps) this month to 4.25%-4.50%, with the rest favoring leaving rates unchanged, according to CME’s FedWatch tool .
Technical Analysis: Sterling is holding above the 20-day EMA
The pound sterling maintains Thursday’s gains near 1.2770 against the US dollar (USD) during Friday’s session in London. GBP/USD is holding above the 20-day exponential moving average (EMA) around 1.2715 and is looking to stay above it. However, the broader outlook remains bearish as the pair remains below the 200-day exponential moving average, which is around 1.2825.
The 14-day Relative Strength Index (RSI) rebounded to neutral levels after the sell-off on November 22. However, the downward trend remains intact.
Looking down, the pair is expected to find a cushion near the rising trendline around 1.2500, which is plotted from the March 2023 low near 1.1800. On the downside, the 200-day EMA will act as key resistance.
