The GBP/USD currency pair hovered around the 1.2850 mark during Monday’s Asian session, sustaining a positive sentiment that began on March 1. Despite a resurgence in the US Dollar‘s strength and recovery from intraday losses on Friday, spurred by encouraging US Nonfarm Payrolls data, the British Pound remains resilient.
In February, US Nonfarm Payrolls exceeded expectations, recording a robust increase of 275K, surpassing January’s 229K and the anticipated 200K. However, US Average Hourly Earnings (YoY) exhibited slight moderation, growing by 4.3%, a fraction below both the estimated and previous reading of 4.4%. On a monthly basis, there was a 0.1% increase, falling short of the expected 0.3% and the previous month’s 0.5%.
The positive outlook for the GBP/USD pair persists as market participants widely anticipate a potential interest rate cut by the Federal Reserve (Fed) ahead of the Bank of England (BoE). This speculation is seen as a means to narrow the policy divergence between the two central banks. Federal Reserve Chair Jerome Powell, in his testimony before the US Congress last week, reaffirmed the central bank‘s stance, suggesting possible cuts in borrowing costs later in the year, contingent upon the inflation trajectory aligning with the Fed’s 2% target.
Last week, UK Chancellor of the Exchequer Jeremy Hunt presented the Spring Budget to Parliament, fostering positive sentiment around the UK’s economic outlook. The Office for Budget Responsibility’s (OBR) forecast of stronger economic growth further contributed to the optimistic atmosphere.
Looking ahead, market participants are eagerly awaiting key employment data from the United Kingdom (UK), including the ILO Unemployment Rate (3M) and Employment Change figures scheduled for release on Tuesday. Additionally, the Consumer Price Index data for February is poised to capture the attention of investors and analysts alike.
