GBP/USD recovers further on Friday as the US dollar retreats
- Greenback holds onto daily losses during Friday’s American session.
- US employment data triggers correction of the dollar.
- GBP/USD up on Friday, but down for the week.
The GBP/USD is hovering near 1.3800 after a sharp recovery from 1.3730, the lowest level since mid-April. The pair bottomed immediately after the release of the US employment report and then bounced to the upside as the greenback reversed, falling across the board.
Non-farm payrolls rose by 850K surpassing expectations. It was the best month in terms of job creation since August of last years. The dollar rose initially but then changed its directions. Profit taking and probably a “buy the rumor, sell the fact” behavior triggered the decline. The DXY dropped from monthly highs back under 92.50.
Next week, the FOMC minutes of its latest meeting would be the key event in the US. The short-term momentum still shows some strength in the dollar that will be challenged over the next sessions. Wall Street will remain close on Monday (Independence day in the US).
Regarding the pound, analysts at ING, point out the it held up better than most of its G10 peers to the dollar’s appreciating trend, “which also denotes how the market continues to see the recent sharp rise in Delta variant cases in the UK as unlikely to derail the country’s economic recovery”. Key data next week included GDP growth in the UK but ING analysts warn focus will likely be on another speech by Bank of England Governor Andrew Bailey