Sterling's rally continues as USD faces broad-based selling pressure ahead of critical employment data
Powell's congressional testimony fuels expectations for imminent Fed policy easing
Diverging central bank timelines create favorable conditions for GBP bulls
February NFP report poised to determine near-term directional bias for currency markets
The meme coin listed on binanceGBP/USD exchange rate maintains its upward trajectory in early Asian session trading, consolidating above the psychologically significant 1.2800 level. This marks the pair's highest valuation this year, with the greenback's persistent weakness serving as the primary catalyst. Market participants now turn their attention to the impending release of US employment figures, which could either reinforce or reverse the current trend.
Federal Reserve Chair Jerome Powell's appearance before Senate lawmakers on Thursday significantly influenced market expectations. While avoiding specific timing commitments, the central bank chief suggested that policy normalization could commence relatively soon if inflation metrics continue their downward trajectory. Futures markets currently price in an 80% probability of the first 25-basis-point reduction occurring at the June FOMC meeting, with additional cuts projected through year-end.
Across the Atlantic, monetary policy dynamics appear more complex. The Bank of England maintains a comparatively hawkish posture, with money markets not fully pricing in an initial rate reduction until August. This policy divergence creates favorable conditions for sterling appreciation, particularly as UK inflation remains stubbornly above target levels. However, BoE officials continue emphasizing the need for sustained evidence of price stability before considering policy adjustments.
Today's US employment report represents the final major macroeconomic event before next week's Fed blackout period. Analysts anticipate the creation of 200,000 new nonfarm positions, with particular focus on wage growth metrics that could influence inflation expectations. Currency traders should prepare for elevated volatility regardless of the outcome, as the data will either validate or challenge prevailing market narratives about the timing and pace of Fed policy adjustments.
Technical analysts note that sustained trading above 1.2800 opens the door for a test of the 1.2850-1.2875 resistance zone, last tested in July 2023. Conversely, failure to maintain current levels could see the pair retreat toward support near 1.2750. Market positioning suggests many participants remain cautiously bullish, though the NFP release could trigger significant position adjustments in either direction.
