The GBP/USD pair retreated from a nearly one-year high as the USD gained momentum amid the upbeat US jobs data. The US bond yields rose, boosting the US dollar. However, the risk-on impulse limited the USD gains and prevented any significant decline in the GBP/USD pair. Traders also appeared reluctant ahead of next week’s US CPI report and the BoE policy meeting.
On Friday, the GBP/USD pair dropped to a fresh daily low in response to better-than-expected US monthly employment details. However, the spot prices bounced back to the 1.2585-1.2590 region during the early North American session and traded with a mild positive bias for the third straight day. The pair is currently trading below a nearly one-year high touched earlier in the day.
The US Labor Department reported that the US economy added 253,000 jobs in April, smashing the forecast of 180,000 by economists. The US bond yields rose, pushing the US dollar higher. The upbeat data led to an improvement in market sentiment and boosted the US dollar.
However, the risk-on impulse limited the gains for the USD and prevented any significant downfall for the GBP/USD pair. Investors were also cautious ahead of next week’s US CPI report and the BoE policy meeting. The market participants will closely watch the CPI data for signs of inflationary pressure in the US economy. Meanwhile, the Bank of England is expected to maintain its policy stance at the upcoming meeting.
In the current scenario, the GBP/USD pair is likely to remain volatile in the short term, as the market participants weigh the impact of the US jobs data and the upcoming events. The pair could face resistance at the 1.2600 handle, while the downside is likely to be limited by support at the mid-1.2500s.
Overall, the positive US jobs data led to a pickup in the USD demand, causing a retreat in the GBP/USD pair from a nearly one-year high. However, the risk-on impulse limited the USD gains and prevented any significant downfall in the GBP/USD pair. The market participants remain cautious ahead of next week’s US CPI report and the BoE policy meeting.
