The Pound Sterling (GBP) retreated against the US Dollar (USD) on Friday, failing to hold above the key resistance level of 1.2600.
- Initial Rally on Weak NFP Data: The GBP initially gained after the Nonfarm Payrolls report showed weaker-than-expected job growth and slower wage growth, potentially reducing pressure on the Fed to raise rates.
- US Services PMI Disappoints: However, optimism faded after the US ISM Services PMI came in below expectations, indicating potential contraction in the service sector.
- Higher Service Prices Renew Inflation Concerns: Rising service sector prices in the US renewed concerns about persistent inflation, potentially delaying Fed rate cuts and supporting the USD.
Technical Analysis: Uncertain Near-Term Outlook
- The GBP/USD pair remains above the 1.2500 support level but struggles to maintain gains.
- The breakout from the Head and Shoulders pattern is unclear.
- The RSI suggests indecision among investors.
Overall, the future direction of the Pound Sterling hinges on the market’s assessment of the Fed’s monetary policy stance and the development of inflation pressures in the US.
