- GBP/USD remains on the backfoot in the initial European trading hours
- Risk-aversion dents sterling demand.
- US dollar gains on strong economic data, NFP eyed later.
The appreciative tone of the US dollar keeps GBP/USD on the edge. The pair extends the previous day’s losses and trades on a lower note on Friday.
At the time of writing, GBP/USD trades at 1.4095, down 0.05% for the day.
The US Dollar Index (DXY), which tracks the performance of the greenback against its six rivals, rose to 90.57 with gains of 0.08%, the levels last seen in April. The US dollar follows the move of US benchmark T-bond yields, which remain elevated near 1.62%.
The ADP report showed US companies hired 978k workers against the market expectations of 650k. The Initial Jobless Claims fell below 400K, below the market consensus. The ISM Services PMI jumped to 64 in May, breaking a fresh record high and beating the market expectations at 63.
In addition to that US President, Joe Biden proposed a new 15% minimum corporate tax instead of a 28% tax floor, aiming to gain Republican support for the infrastructure package.
The greenback zoomed on the economic optimism and expectations of a sooner than expected Fed tightening.
On the other hand, the sterling is being pressured as to whether the country will enter into the final phase of complete re-opening on June 21. The concern of the delta Covid-19 variant first detected in India might delay the UK plan of ease of all covid-19 restrictions and it will miss the deadline.
As for now, traders are bracing up for the much anticipated US Non-Farm Payroll Data, Fed Chair Jerome Powell Speech, and Unemployment Rate to gauge the market sentiment.
