Fundamental Market Analysis for May 06, 2024 GBPUSD
The GBP/USD pair continued its winning streak for the fourth consecutive day, trading near 1.25500 during Asian trading hours on Monday. The strengthening of the GBP/USD pair may be attributed to revised expectations for an interest rate cut by the Federal Reserve (Fed) in 2024 following the release of lower-than-expected US employment data.
On Friday, the US non-farm payrolls data revealed that the United States economy added 175,000 jobs in April, below the forecast of 243,000. This indicates a significant slowdown from March's 315,000 jobs. Additionally, average hourly earnings (y/y) rose 3.9% in April, slightly below expectations of 4.0% and 4.1% previously. Meanwhile, the monthly increase was 0.2%, slightly below the expected 0.3%.
The U.S. Federal Reserve is expected to start cutting rates in September, which differs from previous forecasts pointing to November. According to the CME FedWatch Tool, the probability of a 25 basis points (bps) Fed rate cut at the September meeting rose to 48.8%, up from 43.8% a week ago.
In overseas markets, the Bank of England (BoE) is expected to maintain its current interest rate of 5.25% at its meeting on Thursday. Investor sentiment for a potential interest rate cut by the Bank of England has been delayed until September, as investors express concern over strong wage growth in the UK, which is fuelling core inflation, the central bank's preferred measure of inflation.
In April, Bank of England Governor Andrew Bailey expressed optimism that UK inflation appeared to be on track to meet the 2% target. Inflation fell to 3.2% in March, the lowest since September 2021.
Trading recommendation: Trade with buy orders when the price reaches 1.26000. Sell at the price level of 1.25100.
On Friday, the US non-farm payrolls data revealed that the United States economy added 175,000 jobs in April, below the forecast of 243,000. This indicates a significant slowdown from March's 315,000 jobs. Additionally, average hourly earnings (y/y) rose 3.9% in April, slightly below expectations of 4.0% and 4.1% previously. Meanwhile, the monthly increase was 0.2%, slightly below the expected 0.3%.
The U.S. Federal Reserve is expected to start cutting rates in September, which differs from previous forecasts pointing to November. According to the CME FedWatch Tool, the probability of a 25 basis points (bps) Fed rate cut at the September meeting rose to 48.8%, up from 43.8% a week ago.
In overseas markets, the Bank of England (BoE) is expected to maintain its current interest rate of 5.25% at its meeting on Thursday. Investor sentiment for a potential interest rate cut by the Bank of England has been delayed until September, as investors express concern over strong wage growth in the UK, which is fuelling core inflation, the central bank's preferred measure of inflation.
In April, Bank of England Governor Andrew Bailey expressed optimism that UK inflation appeared to be on track to meet the 2% target. Inflation fell to 3.2% in March, the lowest since September 2021.
Trading recommendation: Trade with buy orders when the price reaches 1.26000. Sell at the price level of 1.25100.
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