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  • Nonfarm payrolls in April rose 263K, wage inflation disappoints.
  • US Dollar Index fails to hold above 98 after data.
  • Coming up: Markit and ISM non-manufacturing PMI from the U.S.

The GBP/USD pair fell to a daily low of 1.2987 earlier in the session but gained traction and erased its daily losses as the greenback weakened following the mixed tone in April labour market report. As of writing, the pair was a couple of pips below yesterday’s closing level, trading at 1.3030.

The U.S. Bureau of Labor Statistics (BLS) today reported that nonfarm payrolls in April increased by 263,000 and surpassed the market expectation of 185,000. Although the initial market reaction lifted it to a weekly high of   98.10, the US Dollar Index reversed its direction with markets paying closer attention to underlying details of the report.

The BLS’s press release revealed that the wage inflation, as measured by the average hourly earnings, rose 0.2% and 3.2% on a monthly and yearly basis, respectively, to fall short of analysts’ estimates. Finally, the labour force participation rate edged down to 62.8% from 63%. Commenting on the market reaction to the NFP data, “The slightly lower dollar after the excellent US payroll report does not mean that the report will not be a benefit to the greenback but only that in the immediate reaction the good news was already priced into the currency markets,” said FXStreet senior analyst Joseph Trevisani.

Ahead of the IHS Markit’s and the ISM’s PMI reports for the service sector, the US Dollar Index is virtually unchanged on a daily basis at 97.80. In addition to the PMI data, FOMC members Evans, Clarida, Williams, and Bowman will be delivering speeches later in the day.

Technical outlook by FXStreet analyst Yohay Elam

Immediate resistance awaits at 1.3045 that capped the pair in recent hours. The round number of 1.3100 was a high point on Wednesday and serves as significant resistance. The next level is 1.3130 that held cable down in mid-April. 1.3200 is next.

The very round 1.3000 line is eyed by many traders and the point also coincides with the 200-SMA. The March low of 1.2960 remains a potent line. The temporary cap of 1.2920 from late April and the two-month trough of 1.2870 is next.