GBP/USD eyes upside above 1.2600 on weak US NFP forecasts

  • GBP/USD is trading lackluster as investors have reduced volume ahead of the US NFP.
  • Poor ADP Employment Change numbers have trimmed the forecasts of the payrolls data.
  • The BOE needs to continue elevating its interest rates aggressively to contain the runaway inflation.

The GBP/USD pair is auctioning back and forth in a 1.2565-1.2590 range. It looks like a lackluster Asian session is carry-forwarding to the European shift and all eyes are set on the event of the US Nonfarm Payrolls (NFP).

The US economy will report the NFPSs, Unemployment Rate, and ISM Services PMI on Friday. The market participants have lowered the consensus for the payroll data. Earlier, the expectations for the employment generation figures were 325k. Now, the dismal Automatic Data Processing (ADP) Employment Change has lowered the forecasts significantly to 225k, as per Reuters. The Unemployment Rate is expected to decline to 3.5% from the prior print of 3.6%. The entire employment data signals that a tight labor market will continue its dominance, however, the rate of employment generation will diminish vigorously.

Apart from the employment data, investors will focus on the ISM Services PMI data. A preliminary estimate of the ISM Services PMI is hinting at underperformance. The economic catalyst is expected to land at 56.4 against the prior print of 57.1.

Meanwhile, the pound bulls pushed cable higher on Thursday amid a rebound in the positive market sentiment. Risk-perceived currencies gained a lot of traction. A light economic calendar on the pound front will provide more power to the chatters over inflationary pressures and interest rates in the UK. The Bank of England (BOE) is expected to continue dictating bumper rate hikes as it seems the only measure to tame the runaway inflation. Investors should be informed that the inflation rate in the UK is stable above 9%.

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