The GBPUSD currency pair was trading up over 145 pips as the British pound rallied against the US dollar, boosted by the release of upbeat UK GDP data. According to the Office for National Statistics, the British economy grew 0.3% in February, beating analysts' expectations of a 0.1% expansion.
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The Sterling pound’s rally was also aided by the much weaker US dollar, which has fallen in the past two days since the Fed Chairman, Jerome Powell, finished testifying before the US Congress. Investors have already priced in the next Fed rate hike, which explains why the dollar is falling.
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However, the release of upbeat US nonfarm payroll data for February during the American session did little to boost the dollar. The US added 311,000 nonfarm jobs in February versus analysts' consensus estimates of 205,000 jobs.
The GBPUSD currency pair kept rising as the dollar fell against most currencies despite the upbeat jobs data and market expectations of a 50 bps rate hike from the Fed. Today’s crash in the dollar indicates that the world’s reserve currency has peaked, paving the way for other currencies to rally against it.
Furthermore, today’s NFP data was not unique since the print has beaten analysts' expectations for the past ten months, which explains today’s muted reaction. Investors seek other triggers to boost the US dollar apart from the nonfarm payrolls.
Additionally, a slight uptick in the US unemployment rate to 3.6% from 3.4% contributed to the dollar’s woes even as the labour force participation rate increased to 62.5% from 62.4%, offset by the higher unemployment rate.
The GBPUSD currency pair is set to close the week higher against the weaker US dollar. The dollar’s weakness will likely persist until next Tuesday, when the latest US inflation data is released.
The US CPI data will be a crucial determiner of the dollar’s performance next week as a positive print could lift the dollar, while a negative print could boost other currencies, such as the British pound.
*This is not investment advice.
The GBPUSD price chart.
The GBPUSD currency pair was trading up 145.3 pips (1.22%) as the pound gained against the US dollar.
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