- GBP/USD is auctioning around 1.3150 ahead of the US NFP.
- Risk-off impulse has improved the safe-haven appeal.
- An outperformance of the UK’s GDP has failed to underpin the sterling against the greenback.
The GBP/USD pair is displaying back and forth moves in 1.3106-1.3176 as a rebound in the US dollar index (DXY) has paused the risk-perceived currencies. The volatility in cable has been contracted sharply despite an outperformance from the UK’s Gross Domestic Product (GDP). The quarterly GDP landed at 1.3% higher than the market estimate and prior figure of 1%. While the yearly GDP has been recorded at 6.6% slightly higher than the street consensus and previous print of 6.5%.
The pound has been looking for a significant trigger to attract bids from investors as the war between Russia and Ukraine has dampened the supply chain in England. Rising commodity and oil prices are hurting the commodity-importing countries and the pound is not finding interest from the market participants. Despite a principal elevation in the interest rates by the Bank of England (BOE), the pound has failed to fetch buying interest.
By that time, the DXY has rebounded sharply after plunging below 98.00 amid an ongoing negative market sentiment. Also, the US Treasury yields have started moving higher amid optimism over a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed) in May’s monetary policy.
Uncertainty over the disclosure of the US Nonfarm Payrolls (NFP) is keeping investors on the sidelines. An underperformance is likely from the US NFP as a preliminary estimate has slipped to 490K against the previous figure of 678k.