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Pound Rises After Labour Victory as Traders Eye US Nonfarm Payrolls-TraderFactor

Pound Rises After Labour Victory as Traders Eye US Nonfarm Payrolls

The British Pound has surged following a significant Labour Party victory, and traders are eagerly anticipating the US Nonfarm Payrolls report, which could shift market dynamics further. Below, we break down the key movements and what they mean for traders.

GBP/USD Climbs as Labour Party Wins Big

Labour’s Landslide Victory Bolsters the Pound

The British Pound is climbing higher, reaching near 1.2800 in the European session. The main catalyst behind this surge is the Labour Party’s sweeping victory in the UK general election. Securing 411 seats in the 650-seat House of Commons, Labour leader Keir Starmer is set to become the next Prime Minister.

GBPUSD 4-hour Chart

Pound Rises After Labour Victory as Traders Eye US Nonfarm Payrolls

This landslide win was anticipated by many, resulting in little immediate impact on the Pound’s valuation. However, the renewed political stability is fostering positive sentiment among traders, pushing GBP/USD upwards after a subdued Thursday.

Eye on the Resistance Level

With GBP/USD regaining momentum, it now approaches a key resistance level at 1.2800. Investors are keenly awaiting the release of US labor data, which could provide fresh directives for the pair.

EUR/USD Holds Strong Amid Broad Dollar Weakness

Awaiting Nonfarm Payroll Data

In parallel, EUR/USD is holding its ground above the 1.0800 mark, extending its week-long winning streak. This strength is largely attributed to a weakened US Dollar and a generally upbeat market mood. Traders are focusing on the upcoming Nonfarm Payrolls data release, which could either bolster or halt the Euro’s upward trend.

Market Expectations for Nonfarm Payrolls

The US Nonfarm Payrolls are forecast to increase by 190,000 in June, a decline from the impressive 272,000 recorded in May. The Unemployment Rate is expected to remain steady at 4%. Weak initial jobless claims data and disappointing ISM reports have pointed to some loosening in the labor market, creating uncertainty.

A weaker-than-expected NFP could keep the US Dollar under selling pressure, allowing EUR/USD to extend its rally. Conversely, a strong NFP print exceeding 220,000 could prompt a reassessment of the Fed’s policy outlook, potentially leading to a downward correction in EUR/USD.

Gold Shines Amid Economic Uncertainty

Investors Bet on Lower Interest Rates

Gold is continuing its positive run, trading in the $2,360s. Investors are increasingly optimistic that the Fed will begin cutting interest rates sooner than previously anticipated, especially amid weakening economic indicators. The softer US Dollar further supports gold prices, making it an attractive hedge for investors.

Key Data Points to Watch

The Nonfarm Payrolls report is pivotal in shaping these rate cut expectations. Should the data reveal a significant slowdown in job creation, it could fuel speculation of an imminent Fed policy pivot, further boosting gold prices.

What to Expect from the Nonfarm Payrolls Report

Labor Market in Focus

Friday’s Nonfarm Payrolls report is expected to show a rise of 190,000 jobs in June, down from 272,000 in May. The unemployment rate is predicted to remain at 4%, while average hourly earnings growth may dip to 3.9% from 4.1%. Despite steady job gains, there are underlying signs of softening in the labor market, raising concerns about broader economic trends.

Potential Market Reactions

A weaker-than-expected payroll number could see the US Dollar under pressure, benefiting GBP/USD and EUR/USD. Meanwhile, a stronger figure could lead to a reassessment of the Fed’s rate cut timeline, impacting various asset classes differently.

Conclusion

With political changes in the UK and critical US economic data on the horizon, forex traders have plenty to keep an eye on. The Labour Party’s victory provides a boost to GBP, while the upcoming Nonfarm Payrolls report promises to add volatility to both forex and commodities markets. Stay tuned for the results, and adjust your strategies accordingly.

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Author

  • Phyllis Wangui

    Phyllis Wangui is a Financial Analyst and News Editor with qualifications in accounting and economics. She has over 20 years of banking and accounting experience, during which she has gained extensive knowledge of the forex, stock news, stock market, forex analysis, cryptos and foreign exchange industries. Phyllis is an avid commentator on these topics and loves to share her insights with others through financial publications and social media platforms.

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