- GBP/USD edged lower during the early North American session in reaction to the upbeat US NFP report.
- The US economy added 372K new jobs in June (268K expected) and the jobless rate held steady at 3.6%.
- The data reaffirmed bets for aggressive Fed rate hikes and continued lending support to the greenback.
The GBP/USD pair struggled to capitalize on its intraday bounce from the 1.1920 region and attracted fresh selling in reaction to mostly upbeat US employment details. The pair was last seen trading around the 1.1985-1.1980 region, down nearly 0.35% during the early North American session.
The intraday US dollar pullback from a two-decade high was quickly bought into after the headline NFP showed that the US economy added 372K jobs in June. This was slightly below the previous month’s downwardly revised reading of 384K, though it was well above the anticipated 268K. Adding to this, the Unemployment Rate held steady at 3.6%, as expected, and cemented expectations for a more aggressive policy tightening by the Fed.
The prevalent cautious mood around the equity markets offered some support to the safe-haven greenback. Weaker US Treasury bond yields held back the USD bulls from placing fresh bets and offered some support to the GBP/USD pair, at least for the time being. The near-term bias, however, remains tilted in favor of bearish traders amid Brexit woes and expectations for a less hawkish Bank of England.
Investors remain concerned that the UK government’s controversial Northern Ireland Protocol could trigger a trade war with the European Union amid the cost-of-living crisis. Furthermore, recession fears could force the BoE to adopt a gradual approach toward raising interest rates and act as a headwind for the British pound.
Technical levels to watch