Jul 08, 2022 00:07AM ET
GBP/USD gives back its gains from early Asian trading and hits a new daily low at 1.2020 at the start of Friday's London session. The cable pair's latest setback may be related to the U.S. dollar's rebound in the face of renewed risk-off sentiment as well as cautious market sentiment ahead of the June U.S. jobs report.
Nonetheless, the U.S. dollar index (DXY) rallied to 107.09, erasing early losses near 20-year highs. The dollar pulled back from a multi-day high on Thursday as mixed U.S. data added to easing fears of an economic slowdown, largely due to attempts by the Fed and the Bank of England (BOE) to talk down the recession.
In addition to the USD decline, GBP/USD buyers also welcomed the resignation of the British Prime Minister from the post of British Conservative Party leader after several political resignations and a strong push from the cabinet. The move elicits a sigh of relief from rebels and ensures that no major political damage is done. However, the search for a successor and a sober cabinet with numerous new appointments keep risk sentiment in check.
As a result, GBP/USD traders should keep an eye on UK politics for immediate guidance. However, U.S. employment figures for June and recession headlines will be more important to provide fresh impetus. The forecast is for nonfarm payrolls (NFP) to post the lowest monthly job growth since April last year, falling to 268,000 from 390,000 in June, while the unemployment rate is expected to remain unchanged at 3.6% in the said month