GBP/USD: Cable sellers cheer 50-DMA break as US NFP recall Fed hawks, PMIs in focus

• GBP/USD extends the previous day’s reversal from three-week high, holds lower ground near intraday bottom.
• BoE hawks retreat amid lack of UK data, US Dollar cheers escalating Fed rate hike concerns on upbeat US NFP.
• Light calendar in Asia, mixed sentiment fail to inspire Pound Sterling traders.
• Final readings of UK S&P Global PMIs, US ISM Services PMI for May eyed for intraday moves of Cable.

GBP/USD remains pressured toward 1.2400 while extending the previous day’s U-turn from a three-week high heading into Monday’s London open, mildly offered near intraday low of 1.2426 by the press time. In doing so, the Cable pair justifies the market’s dicey momentum amid a lack of major data/events, as well as Fed policymakers’ blackout period ahead of next week’s Federal Open Market Committee (FOMC).

That said, the Cable pair marked the first weekly gain in four despite retreating from a short-term key horizontal resistance area on Friday. In doing so, the Pound Sterling justifies hawkish concerns about the Bank of England (BoE) despite recently justifying an increase in the odds of the Federal Reserve (Fed) rate hike concerns, backed by the upbeat US employment data. It’s worth noting that the political jitters in the UK also prod the GBP/USD buyers, especially when the US diplomats have successfully avoided the debt payment default woes.

During the last week, upbeat signals from the UK inflation underpinned the hawkish BoE concerns ahead of Friday’s US NFP that bolstered calls for the Fed’s 0.25% rate hike in June, as well as slashed the odds favoring the Fed rate cut in 2023. That said, the US jobs report for May surprised markets with a jump in the headline Nonfarm Payrolls (NFP) by 339K versus 190K expected and 294K prior (revised). It’s worth noting, however, that the Unemployment Rate also rose to 3.7% from 3.4% prior, versus 3.5% market forecasts. It should be noted, that the Average Hourly Earnings eased whereas the Labor Force Participation Rate remain the same as previous.

Apart from that, May’s local elections in the UK have raised doubts on UK PM Rishi Sunak’s future as the Labor Party braces for a major victory and recently gained a strong economic supporter. Elsewhere, the market’s sour sentiment due to the the geopolitical concerns about China, Russia, Ukraine and the US seem to also propel the US Dollar and weigh on the GBP/USD prices.

Amid these plays, the US 10-year and two-year Treasury bond yields recover after snapping a three-week uptrend by the end of the last Friday. That said, the S&P500 Futures also portray the risk-off mood by mild losses as it retreats from the highest levels since August 2022. The same underpins the US Dollar Index (DXY) strength ahead of the US Factory Orders and ISM Services PMI for May.

Ahead of the US data, final readings of the UK’s S&P Global/CIPS Services and Composite PMIs for May will also entertain the GBP/USD pair traders.

Technical analysis

GBP/USD drops below the 50-DMA support while extending the previous day’s U-turn from a horizontal resistance area comprising multiple levels marked since mid-April.