GBP/USD surrenders weaker headline NFP-led gains to three-week tops
- GBP/USD struggled to capitalize on the post-NFP bullish spike to fresh three-week tops.
- The US economy added fewer jobs than expected, the unemployment rate fell to 5.2%.
- COVID-19 woes extended some support to the safe-haven USD and capped the upside.
The GBP/USD pair faded the post-NFP bullish spike and quickly retreated around 40 pips from three-week tops, around the 1.3865 region touched in the last hour.
Following a brief consolidation through the first half of the trading action, the GBP/USD pair caught some fresh bids and built on the previous day's bullish breakout momentum through the 1.3800 mark. The US dollar remained depressed amid doubts over the US labour market recovery, which, in turn, pushed the major higher for the third successive day.
The USD selling pressure picked up pace following the release of the closely-watched NFP report, which showed that the economy added 235Knew jobs in August as against 750K anticipated. The disappointing headline print, to some extent, was offset by an upward revision of the previous month's reading to 1053K from 943K reported originally.
Additional details showed that the unemployment rate dropped to 5.2% from 5.4% in July, in line with market expectations. Moreover, Average Hourly Earnings data also came in better than consensus estimates and indicated robust growth. Nevertheless, the data might have forced investors to further push back expectations for an imminent taper announcement.
Meanwhile, the incoming softer US economic data now seems to have raised concerns about the risks associated with the fast-spreading Delta variant of the coronavirus. This was evident from a modest pullback in the US equity futures, which extended some support to the safe-haven USD and capped the upside for the GBP/USD pair, at least for now.
Technical levels to watch