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Dec 03 - 11:55 AM

GBP/USD - COMMENT-Back To The BoE Blues For Sterling After Brief US Jobs Lift

By Paul Spirgel  —  Dec 03 - 10:06 AM

GBP/USD fell from its post-payrolls nL1N2SO13H flash high of 1.3311 on Friday near its early U.S. low by 1.3259 as traders focused on falling unemployment rather than disappointing jobs creation, leaving Fed-BoE divergence as the driver with immediate risk of falling to the 200-week moving average at 1.3155.

Hawkish BoE policymaker Michael Saunders nL1N2SO0P0, who voted for a hike last month, dealt sterling a blow before the U.S. payrolls report by saying he wanted more data on the Omicron virus before deciding on rates at the Dec.
16 BoE meeting.

Sterling bears seized control after the BoE unexpectedly held rates steady on Nov.
4 and have yet to loosen their grip as rates traders have pared UK hike expectations from a fully priced 25bp hike in December to a 33% chance for a 15bp hike.

U.S.-UK rate divergence should continue to weigh on GBP/USD, putting the Nov.
30 low at 1.3195 and 200-DMA at 1.3155 in focus, with the Fed expected to accelerate tapering at its Dec.
14-15 meeting to gain flexibility with rates next year.

The BoE and Fed meetings now top the agenda for cable traders as markets look past the payrolls report.

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Refinitiv IFR Research/Market Commentary


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