“¢ USD fails to capitalize on the upbeat NFP-led bullish move.
“¢ Surging US bond yields also did little to boot the USD.
“¢ A strong follow-through needed to confirm any further gains.
The GBP/USD pair quickly reversed its post-NFP fall to 1.3283 and spiked over 50-pips to refresh session tops in the last hour, albeit quickly retreated few pips thereafter
The pair retreated sharply in a knee-jerk reaction to better-than-expected headline NFP print, which surpassed even the most optimistic estimates and came in to show an addition of 223K new jobs in May.
This coupled with an unexpected drop in the US unemployment rate and a modest uptick in average hourly earnings, seen as an indication of a pickup in the inflationary pressure in the economy, provided a minor boost to the US Dollar.
The fall was quickly bought into, with lack of any strong greenback buying interest, despite the ongoing upsurge in the US Treasury bond yields, helping the pair to catch some fresh bids at lower levels. In fact, yields on the benchmark 10-year bond rose nearly 10bps points to 2.917% but did little to provide an additional boost to the greenback.
Meanwhile, the British Pound was further supported by today’s upbeat UK manufacturing PMI. Adding to this, some cross-drive strength, stemming out of a sharp slide in EUR/GBP and strong gains around GBP/JPY, further collaborated towards limiting any immediate sharp downside.
Traders, however, are likely to wait for a strong follow-through beyond the 1.3345-50 immediate supply zone before positioning for any further near-term appreciating move.
Technical outlook
Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The weekly high at 1.3347 is the immediate resistance, with gains beyond the level probably reaching 1.3421, May 24th high. Below 1.3300, on the other hand, the pair is at risk of retesting May’s low of 1.3203.”
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