The British Pound is in positive territory on Friday. GBP/USD is trading at 1.2555, up 0.16% at the time of writing.
UK Services PMI Hits 11-Month High
The service sector accelerated in April, as the Services PMI rose to 55.0, up from 53.1 in April. This was the strongest level since May 2023 and services has shown growth for six straight months, with readings above the 50 level. The PMI survey noted that business and consumer spending were higher in April and reflective of an improving UK economy. The positive report has given the British pound a slight boost on Friday.
All Eyes on US Nonfarm Payrolls
The US labour market has remained surprisingly strong and has weathered the Federal Reserve’s steep rate hikes. The March nonfarm payrolls report sizzled at 303,000, well above expectations. The April data is unlikely to be as strong, but the market forecast of 243,000 would indicate that the labor market remains tight. The markets will be keeping a close eye on wage growth, which contributes to inflation. Wages rose 0.3% m/m in April and are expected to remain unchanged in the April release. The unemployment rate is also expected to remain unchanged at 3.8%.
The Federal Reserve reiterated at this week’s meeting that inflation remained too high to lower rates. Still, the markets were relieved that Fed Chair Powell appeared to rule out the next rate move being a rate hike and that sent the US dollar lower against the major currencies. Just one month ago, the markets had fully priced in a rate cut in September but the probability has fallen to 61%, with a 73% probability of a cut in November.
GBP/USD Technical
- GBP/USD tested resistance at 1.2563 earlier. Above, there is resistance at 1.2590
- 1.2517 and 1.2490 and providing support