GBPUSD Loses Traction as the Dollar Makes Gains

GBPUSD loses traction as the dollar makes gains this time. The pound sterling has been on a rollercoaster this week. After making slight gains, it is now close to the crucial 1.24000 level. With the U.S. dollar gaining traction in the Asian trading session, US yields have risen, resulting in a bearish turn in the GBPUSD pair. On Friday, the market pair saw a significant decrease in its value as the dollar continued to remain the stronger currency. This has caused the pound sterling to remain in a tight spot, unable to make any substantial gains. As it stands, the dollar appears to be in a position of dominance, with the pound sterling struggling to gain any traction.

Data Impact on the Dollar

The recently released report from the US Bureau of Labor Statistics has caused quite a stir in the currency markets. The Non-Farm Payroll (NFP) experienced an impressive increase of 236k, slightly below the market’s expected appraisal of 240k. This had an immediate effect on the US Treasury bond yields and the US dollar, which both saw a rebound. The unemployment rate also experienced a decline, from 3.60% to 3.50%, while the annual hourly earnings dropped from 4.60% to 4.20%. The news of a boost in the NFP and a decline in the unemployment rate and annual hourly earnings was seen as a positive indication of the US job market and had a direct impact on the GBP/USD. The currency pair stretched lower ahead of the weekend due to the report, indicating a bullish sentiment in the US Dollar.

As the US Federal Reserve’s policy meeting nears, investors are closely monitoring the probability of a 25 basis point rate increase. According to CME Group, this probability has decreased from 71% to 60%, making the outcome of the meeting more uncertain. This has affected the GBP/USD pair, with investors uncertain whether a recovery will continue or if the US Dollar will gain demand. Ahead of the release of the March Consumer Price Index (CPI) data from the US, investors have become cautious, making it difficult to predict a clear direction for the GBP/USD pair. If US yields decline during the American session, this could be a sign of recovery for the pair. On the other hand, if Wall Street’s main indexes open negatively, this could be a sign of strength for the US dollar, limiting the pair’s upward movement.

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