Pound Sterling Down After Upbeat Nfp

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Pound Sterling Down After Upbeat Nfp

Pound Sterling (Gbp) Down After Upbeat NFP

The Pound Sterling (GBP) has retreated from its bullish advance and is now falling down after the release of the NFP report from BLS.

In the recent past, the Pound Sterling was gaining ground on hopes that the BoE would cut rates once the ECB & Fed announced similar measures. However, the recent NFP report has crushed these hopes, which is helping the Greenback recover lost ground against the GBP.

Boe Hesitant Over Rate Cuts

According to experts, there's more clarity over rate cuts when it comes to the ECB (European Central Bank) and the Federal Reserve. But in the case of the Bank of England, there's still a lot of uncertainty.

For starters, the Fed has given hints that 2024 will result in around 3 rate cuts. Similarly, the ECB is expected to commence the operation of rate cuts starting in the summer.

As for the BoE, the governor decided to avoid any speculations about the rate cuts. He added that there's a good chance that inflation will pick up once again during 2H2024. In simple words, the BoE has decided that the risk of inflation is bigger than the risk of recession.

The Q3 2023 results from the UK economy showed a 0.1% growth, which is a clear-cut sign of higher interest rates in the country. However, it appears that the Bank of England is more worried about keeping inflation under check.

The technical chart shows that the selling pressure on GBP intensified near the 1.2770 handle. As a result, the GBP/USD turned lower after the NFP and even failed to break the descending triangle on the D1 timeframe.

This means we will have to wait a little more until the GBP/USD stages a decisive breakout from this pattern. Once this happens, higher volume and bigger candle sizes will enter into play.

As for the momentum and trend indicators, the RSI appears to be heading towards the 40 level. A break of this level on the RSI indicator will invite further downside momentum.

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