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- The British Pound is up at around 1.3208 against the US Dollar ahead of the US NFP data for September.
- Surging US Treasury Yields have strengthened the US Dollar.
- BoE’s Mann criticizes the central bank for not taking an early action against Iran war outbreak.
The British Pound (GBP) trades 0.1% higher at around 1.3208 against the US Dollar (USD) during the Asian trading session on Friday. The GBP/USD pair as the US Dollar Index trades slightly lower to near 101.93 after posting a fresh over-a-year high at 102.20 on Thursday.
The US Dollar is expected to trade cautiously as investors await the United States (US) Nonfarm Payrolls (NFP) data for September, which will be published at 12:30 GMT.
Analysts at OCBC flag “this week’s US labour market report” as the key event risk for the Dollar, noting that Bloomberg consensus expects “nonfarm payrolls to rise by 90,000 in September, down from 162,000 in August, while the unemployment rate is forecast to remain unchanged at 4.1%.” They acknowledge that Federal Reserve (Fed) Chair Kevin Warsh has highlighted “the four-week average of initial jobless claims as a timely indicator of labour market conditions,” but stress that “payrolls remain the market’s preferred measure of labour market health.”
OCBC points out that “recent claims data have continued to trend lower, suggesting labour market conditions remain firm,” and therefore “the risk of an upside payrolls surprise appears to be increasing.” In their view, “a stronger-than-expected employment report would likely reinforce expectations of further Fed tightening, keep Treasury yields elevated and provide additional support for the USD.”
The rally in the US Dollar Index is driven by surging United States (US) Treasury Yields, as elevated energy prices have boosted hawkish Fed expectations.
On the GBP front, Bank of England (BoE) member Catherine Mann, an outspoken hawk, has admitted that the central bank has made errors in assessing the consequences of energy supply shock, Reuters report. Her comments in a speech at the Nomura London Macro Forum on Thursday signaled that the central bank should has taken necessary action right at the Iran war outbreak to control inflation.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3208, maintaining a bearish near-term bias as spot holds below the 20-period exponential moving average (EMA) at 1.3333. The pair continues to retreat away from that dynamic cap, and the Relative Strength Index (RSI) at 31.3 hovers just above oversold territory, hinting that while downside pressure persists, sellers may begin to slow rather than accelerate aggressively from current levels.
On the topside, immediate resistance is located at the 20-period EMA at 1.3333, which acts as the first hurdle for any corrective bounce and reinforces the broader bearish structure while price trades beneath it. Looking down, the Year-Till-Date (YTD) low at 1.3140 is the major support level.
