**GBP/USD Flat Lines above 1.3450 as Traders Eye US Jobs Data**
*By Dhwani Mehta, FXStreet*
The GBP/USD pair is consolidating above the 1.3450 mark in early trading hours, as markets remain subdued ahead of crucial US jobs data releases. The pair is holding steady after showing modest moves overnight, reflecting a cautious sentiment among traders. Sterling continues to garner support from several domestic and international factors, but the primary focus remains on the release of the US Non-Farm Payrolls (NFP) data and its potential impact on USD dynamics.
## Sterling Holds Firm amid Dovish Fed Rhetoric
Cable has retained its footing following subdued demand for the US dollar. This trend emerged as Federal Reserve policymakers signaled a potentially less aggressive monetary tightening path in their recent communications. The lack of hawkish surprises has kept the greenback under pressure, allowing the pound to consolidate recent gains.
### Key Factors Supporting GBP/USD
– **Fed Policy Outlook:** Comments from Federal Reserve officials have reiterated a data-dependent approach, causing traders to temper their expectations for aggressive inflation-fighting rate hikes in the near term.
– **Lower US Treasury Yields:** US bond yields have subsided, contributing to broad-based dollar selling and indirectly supporting the pound.
– **Risk Sentiment:** Improved risk appetite, driven by signs of resilience in global growth and earnings season performance, has weighed on the safe-haven appeal of the dollar.
– **UK Economic Data:** Though the UK faces its own domestic challenges, recent data has surprised to the upside, particularly in the labor market and services sector.
## Market Awaits US Non-Farm Payrolls
All eyes are on the upcoming US jobs report, scheduled for release later in the day. The Non-Farm Payrolls outcome is widely regarded as a bellwether for Fed policy expectations, influencing both bond markets and currency pairs like GBP/USD.
### What Analysts Expect
– **Consensus Forecasts:** Markets are looking for the US economy to have added approximately 150,000 jobs in the latest month, with the unemployment rate expected to hold steady.
– **Wage Growth:** Average hourly earnings will be scrutinized for signs of persistent wage inflation, an indicator closely watched by the Fed.
## Recent GBP/USD Price Action
After coming under some pressure earlier, GBP/USD has found a near-term base above 1.3450. The price action reflects a wait-and-see approach, with investors reluctant to take aggressive positions ahead of the jobs data.
– **Technical Picture:** The pair is mostly directionless after bouncing from lower levels, supported by near-term moving averages. Resistance is seen around the 1.3480 and 1.3500 handles, while support is noted at 1.3420 and then at 1.3400.
## Broader Dollar Dynamics
The US dollar’s trajectory has been a major theme in forex markets this year, and recent sessions have seen further softness. The soft tone reflects shifting expectations around US growth and monetary policy.
### Drivers of Dollar Weakness
– **Shifting Fed Expectations:** As above, indications of a possible end to rapid rate hikes have dented yields and the dollar.
– **Mixed US Data:** Recent US economic releases have offered a mixed picture. While the labor market remains tight, some leading indicators are flagging concerns about slowing economic momentum.
– **Fiscal Policy Debates:** Ongoing debate in Washington over budget spending and debt ceilings has also introduced uncertainty, limiting dollar upside.
## UK-Specific Developments and Sterling Outlook
The pound has performed relatively well despite ongoing domestic headwinds. The Bank of England (BoE) remains in focus, with policymakers facing a tough balancing act between managing inflation and supporting growth.
### UK Economic Snapshot
– **Services PMI Strength:** The latest UK Services Purchasing Managers’ Index rose more than expected, signaling continued expansion in the sector.
– **Labor Market Resilience:** Unemployment remains low, adding
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