GBP/USD Casts Its First Look of the Week
On Friday, the GBP/USD pair slid into a calm at 1.2723 after a brief tumble to the 1.2700 mark. The dip was triggered by fresh recession chatter from the U.S. PMI, which felt a little underbusty compared to what traders wanted.
US Payrolls & Manufacturing: The New Tick‑Tock
- Non‑farm payrolls this month are staring at a 175,000 job bump, down from the 206,000 headline of last month.
- The latest U.S. unemployment claims (ending 26 July) jumped to 249,000 from 235,000.
- The manufacturing PMI fell to an eight‑month low of 46.8, missing the expected rise of 48.8.
These numbers are the paper trail the Federal Reserve will follow before nudging rates down next September.
Fed’s Decision: Pinch‑Me, It’s Still a Cut
With the market already betting on a 100 % chance of a quarter‑point slash on 18 September, the room for uncertainty is shrinking. A hiccup in the slowdown could derail that plan, throwing a wrench into the hopes of a gentle easing… and maybe nudging investors toward a sharper pull‑away from a recession.
UK Bonds Are Dancing, But the Pound Is Still on a Whiplash
- Yield on ten‑year UK gilts fell by about 11 basis points to 3.86 %.
- Two‑year rates took a bigger dip of 15 basis points, the steepest so far this year.
The Bank of England’s Committee split 5‑4 to slash rates to 5 %—though they kept the future direction a bit vague. This keeps the GBP/USD pair on an anxious treadmill, reacting sharply to new data.
The Pound Might Dip Below 1.2650
Ahead of the July 4 UK election, bond yields are sliding and uncertainty is swirling. If the pound slips under 1.2650, it could stay there for a while—unless the U.S. dollar kicks its heroic haven status to new heights again.
Key Takeaways
- US payroll numbers look cooler than expected, fueling Fed talk of a September cut.
- BOE easing nudges the pound back but creates a volatility cocktail.
- The dollar remains a safety net for the global markets, punching up as jobs data disappoints.
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