The GBP/USD pair remained in a narrow range below the mid-1.2700s during the Asian session on Friday, pausing to consolidate recent gains that pushed the currency pair to a three-week high the previous day. Market participants appeared cautious, opting to wait for the release of the critical US monthly employment data later in the day.
The highly anticipated Nonfarm Payrolls (NFP) report will be scrutinized for insights into the US Federal Reserve’s interest rate outlook, which could influence their policy decision at the upcoming December meeting. This, in turn, is expected to impact the near-term direction of the US Dollar (USD) and offer direction for the GBP/USD pair.
Despite recent declines in US Treasury bond yields, which typically weigh on the USD, the currency has failed to attract significant buying interest. This weakness comes amid expectations that the Federal Reserve will adopt a cautious stance on cutting interest rates, partly fueled by hopes that US President-elect Donald Trump’s policies will bolster inflation. Additionally, a softer global risk tone and ongoing geopolitical tensions have supported the safe-haven USD.
Meanwhile, concerns around the UK economy, particularly comments from Bank of England (BoE) Governor Andrew Bailey signaling potential rate cuts in 2025, have capped enthusiasm for the British Pound (GBP). These factors combined have limited the GBP/USD pair’s upward movement.
Nonetheless, the currency pair appears on track to register modest weekly gains for the second consecutive week. However, any further upward momentum is likely to face resistance near the key 200-day Simple Moving Average (SMA) around the 1.2820 mark. As a result, traders are advised to wait for clear follow-through buying to confirm whether the GBP/USD pair has established a near-term bottom and is set for a sustained recovery from November’s multi-month low near the 1.2500 level.
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