GBP/USD ends week lower after being unable to break 1.3030/50

The pound fell on Friday against the US dollar and reached the lowest in 9 days. GBP/USD accelerated the decline after the NFP report. The greenback gained momentum and confirmed weekly gains in the market, recovering part of the lost ground during the previous week. 

Jobs data showed that the labor market remains solid. NFP rose by 220K significantly higher than expected. Net revisions added a total of 47K. Average hourly earnings rose 0.2% in June, below expectations. The US dollar initially dropped but then reversed sharply. 

NFP underpins Fed's dilemma: unemployment and (wage) inflation are low at the same time - Danske Bank

GBP/USD bottomed at 1.2865 at the beginning of the American session. Then it rebounded modestly. During the last hours, it has been steady, moving in a range between 1.2890 and 1.2870, around 140 pips below the level it had a week ago. Cable failed to break the key resistance that is located around 1.3030/50, and turned to the downside. 

Week ahead 

In the US, next week key event will be Janet Yellen presentation to the Congress on Thursday. Today, the Federal Reserve released the Monetary Policy Report. The Fed sees long-run inflation stable with some measures low by historical standards. Regarding the financial system, they see only moderate vulnerabilities. On the data front, CPI and retail sales are due on Friday. 

Fed: Consumer spending appears to have rebounded recently - MonPol Report

Jobs data is the main report next week in the United Kingdom. “The May UK labour report (Wed) will probably come as a disappointment to MPC hawks banking on the Phillips Curve - that is low unemployment rates translating into higher labour costs - coming good. While job gains are likely to remain resilient (ING: +127k), a slowdown in headline wage growth to 1.8% will add little macro support to calls for a Nov BoE rate hike”, said analysts from ING.