GBP/USD fell on Friday, including a jolt lower in the wake of above-forecast U.S. non-farm payrolls before stabilizing below 1.20, and will need follow-through from the BoE after hawkish comments this week about the effect of currency weakness nS8N2Y300W on soaring inflation to establish a base.
Sterling fell from pre-data levels by 1.2030 to a post-release low of 1.1953, though it did not revisit the weakest level of the day -- 1.1920 -- hit in early London trade.
The U.S. jobs data signaled the Fed will probably deliver another exceptionally large rate increase of 75bp at its July 27 meeting FEDWATCH, putting sterling at a disadvantage with GBPOIS futures indicating only a 60% chance of the BoE enacting a 50bp BoE hike at the Aug.
4 MPC gathering BOEWATCH.
Continuation of the BoE's relatively dovish rate stance would portray GBP/USD's recent rise off 2022 lows by 1.1877 as an a opportunity for sterling bears to add to short positions, leaving sterling vulnerable to testing a series of daily lows dating back to March 2020 on the path to the pandemic trough of 1.1413 hit that month.
For more click on FXBUZ