In Friday’s North American session, the GBP/USD pair has dropped from its high of 1.3320 as the US Dollar recovers. This came after the release of positive US Nonfarm Payrolls (NFP) data for April. The US Dollar Index (DXY) rose from its low of 99.60.
The latest NFP data showed that 177K new workers were hired, surpassing the estimated 130K but falling short of March’s figure of 185K. The Unemployment Rate remained at 4.2%, as predicted, while Average Hourly Earnings grew by 3.8% compared to the expected 3.9% on a yearly basis. On a monthly basis, the measure of wage growth increased by 0.2%, slower than the projected 0.3%.
Despite the impact of US President Donald Trump’s tariff policy, the steady hiring in the labor market is unlikely to prompt the Federal Reserve (Fed) to make any changes to their monetary policy. Instead, the focus will be on controlling high inflation expectations. The recent ISM Manufacturing Prices Paid index showed that input costs continue to rise, which could eventually lead to increased prices for consumers and limit the Fed’s ability to ease monetary policy. On the other hand, if there are indications of a slowdown in job growth, the Fed may prioritize employment over inflation.
In the upcoming weeks, the Fed’s monetary policy decision on May 7 will be the main influence on the US Dollar. According to the CME FedWatch tool, traders are anticipating that the central bank will keep interest rates within the range of 4.25%-4.50%.
Meanwhile, the Pound Sterling has rebounded from its weekly low of 1.3260 against the US Dollar on Friday, following a correction from its three-year high of 1.3445 in the past three days. The overall outlook for the pair is positive, as all short-to-long Exponential Moving Averages (EMAs) are trending upward. The 14-day Relative Strength Index (RSI) is also aiming to surpass 60.00, which could trigger a new bullish momentum.
On the upside, 1.3445 will be a significant barrier for the pair, while on the downside, the April 3 high at 1.3200 will serve as a key support level.