- The GBP/USD prepares to finish the week with hefty losses of 0.78%.
- US labor data poured cold water on recession fears ahead of next week’s CPI.
- BoE’s Pill: The bank will reach its inflation target, but it “will take some time.”
The GBP/USD tanks reached a fresh weekly low at 1.2002 as a reaction to a stellar US employment report which eases US recession fears while increasing the odds for further Federal Reserve aggressive tightening amidst a 9% inflation in the country.
During the day, the GBP/USD peaked at around 1.2169, but as abovementioned, it tumbled. Still, the GBP/USD is trading at 1.2078, down 0.67%, though some 70 pips above the day’s low.
GBP/USD PLUNGED ON US DATA
Sentiment remains mixed, with most EU stocks closing with losses while US equities wobble. On Friday, the Department of Labor revealed that July Nonfarm Payrolls added 528K jobs to the US economy, smashing estimations of 250K. Additional data from the US jobs report illustrates that the labor market remains tight, with the Unemployment rate falling to 3.5% and Average Hourly Earnings increasing 0.5% MoM while, on an annual basis, rose by 5.2%
On Thursday, Cleveland’s Fed President Loretta Mester kept her hawkish stance. She said the rate path outlined by June dot plots is “about right,” while adding that a 75 bps for September is “not unreasonable.”
Elsewhere, the Bank of England Chief Economist Huw Pill crossed wires via Bloomberg. He said that the BoE would return to its 2% inflation target but added that “it’s going to be a process, which is going to take time reflecting the magnitude of shocks we’ve seen,” on Friday. Those remarks came one day after the “old lady” raised rates by 50 bps, the most in 27 years, lifting the Bank’s Rate to 1.75%, and warned that the UK might tap into a recession by the year’s end.