The GBPUSD pair weakened on Friday on the back of some weak manufacturing production data from the UK which missed the expectations and also a slightly stronger dollar which was brought about by a better than expected NFP data. This led to a quick correction in the pair and it has to be said that it was a much needed correction as the pair had risen a lot over the past couple of weeks and had made another visit to the highs of the range which warranted a correction.
GBPUSD Looking to Correct
The miss in the manufacturing production data would have been a disappointment to the pound bulls who would have expected to carry on their good work and push the pair through the range highs so that they could look even higher. This also reversed the trend of strong data from the UK which we have been seeing over the past few months. There also continues to be calls for the resignation of the UK PM May and this clearly shows that the political drama is not fully settled as yet. The UK does not need this when it enters into negotiations with the Euro leaders over Brexit but they have only themselves to blame.
Across the Atlantic, we finally saw some light at the end of the tunnel as the stronger than expected NFP data helped to erase some of the thoughts about further bad data from the US, which had been the trend over the last couple of months or so. This had led to concerns on whether the Fed would be bold enough to hike the rates under such circumstances. Also, the FOMC minutes had made it clear that the next rate hike would be dependent on the incoming data which made the employment report even more crucial. This strong data pushed the GBPUSD pair through 1.29 where it ended up for the week.
Looking at the rest of the day, we can expect some more reaction to the employment data from the US on Friday and with this being the first day of the week, expect some consolidation with a bearish bias.
This article was originally posted on FX Empire