GBP/USD is making a determined recovery towards the 1.2800 level as the US dollar weakens on Thursday. With US markets closed in observance of Independence Day, trading volumes remain thin as traders wait for election results from the UK’s Parliamentary Elections. Labour Party is expected to sweep to victory over the Conservative Party, overturning 14 years of Tory leadership. Additionally, US Nonfarm Payrolls (NFP) jobs data is set to be released on Friday, adding further volatility to the markets.
The UK Parliamentary Election is anticipated to see Keir Starmer and the Labour Party unseat Prime Minister Rishi Sunak and the Conservative Party. Advance polling indicates a strong victory for Labour, potentially winning around 400 seats out of the 650 available. This election marks the fourth consecutive Tory leader in just eight years. In terms of economic data, US NFP net job gains are projected to ease to 190K in June, a decrease from the previous month’s 272K. Additionally, US Average Hourly Earnings are expected to moderate further to 0.3% MoM in June.
GBP/USD is undergoing a recovery on Thursday after bouncing near the 200-day Exponential Moving Average at 1.2610. Despite facing a technical rejection near 1.2800, the pair has not seen significant bearish momentum towards the 1.2300 handle. The US Bureau of Labor Statistics’ Nonfarm Payrolls report measures the change in employment in the US, excluding the farming industry. The figure can impact the Federal Reserve’s decisions regarding interest rates and monetary policy, leading to fluctuations in the US dollar and gold prices.
The Nonfarm Payrolls data generally has a positive correlation with the US dollar, as higher-than-expected figures tend to boost the USD. Conversely, lower NFP results could lead to a weaker dollar. Additionally, NFP data can influence the value of gold, with higher figures typically depressing the gold price. However, other components of the jobs report, such as Average Weekly Earnings and the Participation Rate, can also impact market reactions. Overall, the upcoming UK election results and US NFP data are likely to drive further volatility in the GBP/USD pair.
