The Sterling experienced mixed performance on Friday and over the weekend, having appreciated against some major peers, but also declined against the others. The largest gain was registered against the Aussie, namely 0.94%, due to the RBA's monetary policy decision. At the same time, lesser gains of 0.29% were seen against the Kiwi, followed by a 0.08% and 0.05% rallies versus the Swissie and the Loonie, respectively. The Pound, however, dropped 0.52% lower against the Yen, 0.40% versus the US Dollar and 0.38% against the European single currency.
The US labour market lost steam in April, as the world's biggest economy created the fewest number of jobs in seven months and Americans dropped out of the labour force, casting doubts on whether the Fed will hike interest rates before the end of the year. According to the Labor Department, non-farm payrolls rose by 160,000 jobs last month as construction employment barely climb and the retail sector shed jobs. That was the smallest gain since September and below the first-quarter average job growth of 200,000. Moreover, employers appeared to add 19,000 fewer jobs in February and March than previously estimated. While the unemployment remained unchanged at 5.0% it came at cost of people dropping out of the labour force. The share of Americans participating in the labour force dropped to 62.8% in April from 63.0% in March. Average hourly earnings of private-sector workers climbed by 8 cents last month, or 0.3%, to $25.53. From a year earlier, wages grew 2.5%, a firmer gain than March's rise, albeit below the 3.0% advance that economists say is needed for inflation to climb to the Fed's 2.0% target.
The Fed has so far refrained from lifting its benchmark interest rate this year, after December's hike. Officials welcomed the labour market's improvement last month, but remain concerned about sluggish economic activity and tepid inflation.
Relatively quiet Monday
GBP/USD to regain the bullish momentum
Weak US employment data on Friday was insufficient to cause the GBP/USD currency pair to rebound, but, nonetheless, the monthly PP managed to limit the losses at 1.4417. Technical indicators keep giving bullish signals in the short and medium terms, suggesting that a corrective rally is due. Demand around the 1.44 major level, represented by the monthly PP and the 100-day SMA, is likely to prevent the Cable from falling lower. Immediate resistance lies around 1.4424, namely the 20-day SMA, but gains are expected to stretch beyond the 1.4450 mark.
Daily chart
Hourly chart
Bulls now in the majority
Today 58% of all open positions are long, compared to 61% on Friday. At the same time, the number of orders to sell the Sterling increased from 47 to 54%.
At OANDA market sentiment reached a perfect equilibrium, as 50%% of their open positions are short, and the remaining 50% are long. Meanwhile, the sentiment at SAXO Bank also close to the equilibrium, with 51% of their traders holding short positions (previously 54%).
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.44 in three months