British pound against US dollar has been influenced by the UK GDP print. Price action can change if NFP print beats expectations
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Throughout the day, investors will be concentrating largely on the Non-Farm Payroll figure and will be preparing for the next weekly inflation data. Altogether, there will be 4 major announcements over the next week. This afternoon investors will be monitoring February Non-Farm Payroll, which is expected to return to previous figures.
Economists expect the NFP figure to read 225,000, less than half of the previous month but still considerably high. Some economists believe the Unemployment rate may remain at 3.4%, whereas others lean towards 3.5%. However, the Unemployment rate would need to be significantly higher to lower inflation. Some analysts have stated the Unemployment rate would need to be more than 4% for the employment sector to become “more balanced”.
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Investors should note that next week’s inflation figures will likely strongly influence the US Dollar and Stocks. Therefore, traders need to remember that investors will start to prepare for the inflation figures later in the day. The Consumer Price Index is expected to read 0.4%, which will keep the yearly inflation at a similar rate. Furthermore, investors are expecting the Producer Price Index to show 0.3%. If the employment and inflation data is higher than expected, investors will likely lean towards the Dollar as interest rates will accelerate.
GBP/USD - Investors Brace for Non-Farm Payroll Results and Inflation Figures
The GBP/USD continues to increase as the US Dollar generally weakens over the past 24 hours. The Pound has also been supported by the latest Gross Domestic Product figures released this morning. Even though the Pound has gained 1.35% since yesterday’s US session, investors still should be cautious of a potential downward trend. The exchange rate has still formed 3 significantly lower highs over the past 2-weeks.
When looking at technical analysis, we are still waiting to get a major indication of a longer-term upward trend. However, this is possible if the price maintains momentum and surpasses 1.19628. Nonetheless, the price is currently trading at a resistance level and following a downward trend pattern. Traders await bearish indications from moving averages, crossovers, and price action.
GBP/USD 2-Hour Chart on March 10th
Global stocks over the past week have tumbled and have lost more than 4% since Tuesday’s Fed testimony. Since the reaction, the market has started buying bonds with a significantly higher yield than in previous years. This indicates that safe-haven assets are coming into play and can also affect the US Dollar. Though the US Dollar will only be able to act as a safe haven asset if interest rates remain competitive.
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This morning the GBP/USD has been fueled by the UK GDP figure, which read 0.3% instead of the expected 0.1%. The figure is deemed positive for the Pound as it indicates the UK may be able to avoid a formal recession for the time being. The UK’s GDP figure was significantly higher than the previous month, which read -0.5%. Though traders should note that the price action can change if the NFP figure is higher than expected.
