Gbp Falls After Nfp Data

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Gbp Falls After Nfp Data

Pound Sterling (Gbp) Falls To 1.2600 After Nfp Data

decline was seen in the GBP/USD pair during Friday's session, sending it toward the 1.2600 support zone. The weakness in the GBP has arisen from the US NFP report, which shows a strong labor market.

With a reading of 303K against the 200K forecast and the earlier reading of around 270K, the NFP report was positive from every angle.

Wage Growth Up, Unemployment Rate Down

Alongside the NFP report, the US unemployment rate also showed an improvement from 3.9% to 3.8%. Another important factor, 'Annual hourly earnings,' showed a jump of +0.3% m/m. As for the annual wage growth, it has shown a slowdown towards 4.1% against the earlier value of 4.3%.

The bigger picture is that the labor market is still very strong, which will lead us to the scenario of higher wage growth. As a result, inflation will start to tick higher once again and thus force the Fed to delay its plans for rate cuts.

day earlier, Fed present from Minneapolis commented on how there's no need for rate cuts in 2024 at all. As for how many rate cuts could happen, he cited a number of two, which means rate cuts can happen at two meetings.

Meanwhile, the UK is going through a phase of easing inflation, which is good for the economy. However, we can't say the same about the Pound Sterling, as lower inflation invites rate cuts from the BoE.

According to the DMP survey of BoE, wage inflation, along with the prices, will likely go down during the next year. The forecasts for the selling prices have also moved from 4.3% to around 4.1%.

As for the forecasts for wage growth, it has also moved from 5.2% to around 4.9% based on a long-term moving average.

In the UK, the weakness seen in the inflation numbers is the fact that the chances of rate cuts from the BoE are now very high.

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