GBP/USD dipped to 6-month lows below 1.2500.
Headline June US employment data beat consensus forecasts with an increase of 224,000 in non-farm payrolls, although other data was slightly weaker than expected.
Bond yields recovered sharply following the data on a shift in Fed expectations, although there was a partial reversal on Monday amid fragile risk conditions.
Equities declined in Asia on Monday amid reduced expectations of aggressive Fed rate cuts
The dollar advanced strongly following the employment release, although it failed to hold its best levels. The Canadian dollar also pared initial losses from a headline dip in June employment with commodity currencies also recovering some losses.
Gold declined sharply on dollar gains with a dip below $1,400 per ounce before a tentative recovery amid weaker equity markets. Oil prices were supported by reduced fears over global demand conditions.
Domestic developments were limited on Friday with the Halifax reporting a 5.7% increase in house prices in the year to July from 5.2% previously. Confidence in the economic outlook remained fragile following weak PMI business confidence releases during the week with expectations of a more dovish August Bank of England inflation report also a negative factor.
GBP/USD dipped to 6-month lows below 1.2500 following the US employment data but did recover to close just above this level while GBP/EUR bounced from support near 1.1125 to hold around 1.1150.
There were further pledges by some government ministers that parliament would block any ‘no-deal’ Brexit which provided some Sterling protection, although there were also fresh warnings over the risks of a no-deal Brexit. Sterling was little changed on Monday as GBP/USD traded around 1.2525 with markets continuing to monitor domestic political rhetoric.
|07:00||German Industrial Production (M/M)(MAY)||0.40%||-2.00%|
|07:00||German Trade Balance(MAY)||16.8B||16.9B|
|09:30||Euro-Zone Sentix Investor Confidence(JUL)||2.9||-3.3|
|20:00||USD Consumer Credit(MAY)||16.00B||17.50B|