GBP/USD Eases from Three-Week High, Trades with Negative Bias Below 1.2700s

 

The GBP/USD pair is trading within a range just below the mid-1.2700s during the Asian session on Friday, consolidating its recent gains from the past three days, which brought it to a three-week high. Traders appear hesitant to make bold moves, opting to wait for the release of the critical US monthly employment report later today.

The Nonfarm Payrolls (NFP) report is key to shaping expectations for the US interest rate outlook, which will guide Federal Reserve policymakers in their December meeting. This will, in turn, influence the US Dollar (USD) and provide direction for the GBP/USD pair. Meanwhile, a recent drop in US Treasury bond yields has failed to generate significant buying interest for the USD, preventing it from recovering from a multi-week low. However, expectations that the Federal Reserve will maintain a cautious stance on rate cuts, coupled with hopes that US President-elect Donald Trump’s policies could drive inflation, lend support to the USD. 

Additionally, a weaker risk sentiment and ongoing geopolitical tensions favor the safe-haven USD. On the other hand, comments from Bank of England (BoE) Governor Andrew Bailey suggesting four interest rate cuts in 2025 limit bullish sentiment for the British Pound (GBP) and cap the GBP/USD pair.

Nevertheless, the pair is on track for modest gains for the second consecutive week, though any further upward movement is likely to face resistance around the key 200-day Simple Moving Average (SMA) at the 1.2820 mark. This suggests that waiting for a clear follow-through buying momentum is prudent before confirming that the GBP/USD pair has formed a near-term bottom and is positioned for a continuation of its recent recovery from the sub-1.2500 level.

 

 

 

 

 

 

 

Paraphrasing text from "FXSTREET" all rights reserved by the original author.