The GBP/USD pair remains under mild pressure, trading around 1.2425 during the Asian session on Friday. Despite a brief bounce from a multi-day low, the pair is facing a second consecutive day of decline, with little momentum behind the move. Traders are adopting a cautious stance, likely awaiting the release of key US jobs data before making any aggressive moves.
The highly anticipated Nonfarm Payrolls (NFP) report is expected to show a significant slowdown in US job growth, with economists forecasting an addition of 170,000 jobs in December, down from 256,000 in November. The Unemployment Rate is projected to remain steady at 4.1%. These figures, along with Average Weekly Earnings, will be crucial in determining the near-term direction of the US Dollar (USD) and could provide fresh impetus for GBP/USD.
Ahead of this data, market expectations that the Federal Reserve will maintain its easing bias and lower interest rates twice by the end of the year have kept US Treasury yields near their lowest levels since December. This lack of upward movement in yields has failed to boost the USD, potentially offering some support to GBP/USD. However, the Bank of England’s (BoE) more dovish outlook is likely to cap any significant upside for the British Pound.
The BoE reduced its benchmark interest rate by 25 basis points on Thursday and downgraded its growth forecast for 2025. Governor Andrew Bailey also indicated that further rate cuts are expected this year, which continues to weigh on the GBP. As a result, the path of least resistance for the GBP/USD pair remains tilted to the downside, unless US data delivers a surprising boost to market sentiment.
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