GBP/USD keeps the red around 1.3900 mark post-NFP
- GBP/USD remained depressed through the early North American session amid a stronger USD.
- The upbeat NFP added to speculations about policy tightening by the Fed and boosted the USD.
- The BoE’s hawkish signals on Wednesday acted as a tailwind for the GBP and helped limit losses.
The GBP/USD pair quickly reversed the post-NFP dip to sub-1.3900 levels and rallied around 35-40 in the last hour, albeit lacked any follow-through buying. The pair was last seen trading around the 1.3905-10 region, still down nearly 0.15% for the day.
The US dollar added to its modest intraday gains and shot to over one-week tops following the release of a stronger-than-expected US monthly jobs report. The headline NFP print showed that the US economy added 943K new jobs in July, surpassing even the most optimistic estimates.
Adding to this, the previous month’s reading was also revised higher to 938K as against 850K reported earlier. This was accompanied by a larger-than-anticipated fall in the unemployment rate from 5.9% reported in June to 5.4%, beating consensus estimates pointing to a dip to 5.7%.
The data further cemented market expectations that the Fed will tighten its monetary policy earlier than anticipated and pushed the US Treasury bond yields higher across the board. In fact, the yield on the benchmark 10-year US government bond surged back closer to the 1.28% threshold.
This, in turn, was seen as another factor that provided an additional boost to the greenback and exerted some pressure on the GBP/USD pair. That said, a combination of factors continued acting as a tailwind for the British pound and helped limit any deeper losses, at least for not.
The Bank of England hinted about modest tightening at the conclusion of the August monetary policy meeting on Wednesday. This comes on the back of the optimism over the declining trend in new coronavirus cases in the UK, which extended some support to the sterling and the GBP/USD pair.