US Nonfarm Payrolls impress, but pound yawns
It has been a quiet day on the currency markets, which have shown little movement in the Asian and European sessions. Currently, GBP/USD is trading at 1.2457, down 0.08 percent on the day. With US markets closed for the 4th July Independence Day holiday, we can expect more of the same in the North American session.
It has been an uneventful week for the British pound, despite the release of key indicators on both sides of the pond. On Tuesday, the UK released Final GDP for the first quarter. The release was downwardly revised from -2.0% to -2.2%, reflecting the harsh impact of COVID-19 on the British economy. The dismal figure was the sharpest contraction for the economy since 1979. Analysts expect a rebound in Q2, as lockdown measures have significantly eased. At the same time, a ‘second wave’ of the coronavirus later in the year could devastate the fragile UK economy and send the pound to lower levels.
In the US, a solid non-farm payroll report failed to stir up the markets. In April, non-farm payrolls plunged by a staggering 20 million. However, the economy has regained its footing somewhat since then. The June jobs report showed that payrolls climbed 4.80 million, which comes after a May release of 2.509 million. On Friday, British Services PMI came in at 47.1, upwardly revised from the initial reading of 470 points. This points to contraction in the services sector, but the good news is that the PMI has rebounded sharply – in April, the index came in at an abysmal 13.4 points, indicating severe contraction.
Thursday (July 2)
- 19:01 British GfK Consumer Confidence. Estimate -27. Actual -29
Friday (July 3)
- 8:30 British Services PMI. Estimate 47.0 Actual 47.1
*All release times are DST
*Key events are in bold
GBP/USD for Friday, July 3, 2020
GBP/USD showed made an upward move on Thursday, managing to break above the 1.25 line for the first time since June 234. However, the pair was unable to consolidate and ended the day at 1.2468. With US markets closed for Independence Day, there has been little movement in the Asian and European sessions on Friday.
- 1.2540 is a major resistance level which has held firm since late June
- 1.2420 is an immediate support level, which could see action early next week.
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