FX.co ★ Lifedoor | GBP/USD

The British pound (GBP) weakened against the US dollar (USD) on Friday after initially bouncing back in early trading in New York. This reversal came after the release of key economic data from the United States. The US non-farm payrolls report for April revealed weaker than expected job growth and slower wage increases. This data initially caused the dollar to lose ground. However, the dollar rebounded after another report, the ISM's US Services Purchasing Managers' Index (PMI), showed a surprising rise in services prices. This suggests that inflationary pressures are intensifying in the US economy, which could discourage the Federal Reserve (Fed) from cutting interest rates as anticipated. Prior expectations were for the Fed to cut rates in September, but this data has cast doubt on those plans. The disappointing jobs data showed that non-farm employers added only 175,000 jobs in April, significantly lower than the expected 243,000. The unemployment rate also rose slightly to 3.9%. Average hourly earnings, a key indicator of inflation, grew at a slower pace than expected at 3.9% year-on-year. This is down from 4.0% previously and short of the anticipated 4.1% increase. Month-on-month growth also slowed to 0.2%, falling below the expected 0.3%.

Despite this weak US data, the GBP/USD pair failed to hold its gains. The pound is currently recovering from a five-month low but is facing resistance around the 1.2495-1.2520 zone. This weakness reflects a broader downtrend that began when the pair reached a high of 1.2892 recently. Technical indicators suggest there could be a temporary bounce in the GBP/USD price. The MACD indicator is attempting to cross above the trigger line, and the Stochastic indicator is rising after dipping into oversold territory. If buying continues, the pair could reach the resistance zone near 1.2520, where it may encounter further headwinds from the 20-day moving average. Even a small upward move could be challenged by the 200-day moving average at 1.2555 and the downtrend line around 1.2585. In summary, the GBP/USD pair is caught between conflicting forces. Weak US data initially boosted the pound, but concerns about inflation and the Fed's monetary policy outlook are limiting gains. The pair is likely to remain volatile in the near term as investors weigh these opposing factors.