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Jun 04 - 11:55 AM

GBP/USD - COMMENT-Another US Payrolls Miss Puts Sterling 2021 Highs Back In Focus

By Paul Spirgel  —  Jun 04 - 09:43 AM

GBP/USD received a slight boost, rising to 1.4189 from 1.4138, after U.S. non-farm payrolls disappointed expectations nL2N2NL2K1, giving sterling an opening to target this year's high and potentially gains beyond there.

The slower employment growth could reduce pressure for the Fed to begin tapering asset purchases and, thus, delay rate hikes.
Eurodollar rates (FI) have pushed back the first Fed 25bp hike to December 2022 from September 2022 0#ED:.

Declining expectations for an early U.S. taper lifted cable back to the middle of its recent range, 1.4250-1.4083, leaving ample room for a run to new highs should UK pandemic fears abate and data indicate the UK recovery is on track, allowing the BoE to take a more hawkish stance inline with recent musings by BoE members Andy Haldane and Gertjan Vlieghe.

Diverging U.S.-UK rate paths should give bulls fodder for further gains above the 1.4250 2021 high, with the upper 30-week Bolli at 1.4286 and April 2018 high at 1.4377 near-term targets as sterling bulls resume the climb to pre-Brexit referendum levels above 1.50 nL2N2NM151.

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Refinitiv IFR Research/Market Commentary


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