GBP/USD seeks support around 1.2060 amid quiet market mood, US ADP payrolls eyed
- GBP/USD is looking for a cushion around 1.2060 after a marginal selling pressure.
- Accelerating interest rates and weak economic projections have led to a decline in consensus for US ADP employment.
- Sterling reserve is under threat amid multiple headwinds ahead, as cited by Natixis.
The GBP/USD pair has sensed a marginal selling pressure at open and has dropped near the immediate support of 1.2060 in the early Asian session. The positive sentiment is still solid, therefore, recovery is highly expected in the Pound Sterling.
The US Dollar Index (DXY) has sensed some strength after dropping to near the round-level support of 106.00. Meanwhile, the 10-year US Treasury yields are failing to cross the 3.70% hurdle as the Federal Reserve (Fed) is highly expected to ditch the 75 basis points (bps) rate hike spell in its December monetary policy meeting. S&P500 remained subdued on Friday amid the absence of a potential trigger that could drive global markets.
This week, the market participants are preparing for the release of the US Nonfarm Payrolls (NFP) data. But before that, Wednesday’s Automatic Data processing (ADP) Employment data will provide meaningful cues to investors. As per the projections, the economic data is expected to decline to 200k vs. the prior release of 239k. As interest rates are accelerating dramatically and economic projections are facing heat, firms have ditched their recruitment process for the time being.
The bleak growth outlook for the shopping season while Christmas is expected to impact demand for employees in the United States economy. US businesses are hiring fewer seasonal workers this holiday shopping season, as stubborn inflation dims the outlook for retail sales as reported by Financial Times. Employers posted 8.2 percent fewer holiday openings this year than last year, according to jobs site Indeed FT further added.
On the United Kingdom front, a note from analysts at Natixis indicates that “Sterling’s reserve currency role is under threat, particularly since the Brexit referendum, led by relatively weak growth, the reduced appeal of the UK for corporate investment, awareness of the small size of the UK economy relative to its reserve currency status, a decline in labor force due to the departure of Europeans and the onset of a vicious circle where because pound sterling is less attractive, it depreciates, which in turn makes it less attractive still.”