"GBP/USD Breaks Above 1.3100: Limited Upside Potential Ahead"

GBP/USD Drifts Higher Above 1.3100, Potential Upside Seems Limited

Source: FXStreet

Market Overview

• The GBP/USD pair experiences mild gains, trading around 1.3130 in Monday's Asian session.
• This movement follows a three-day losing streak.

Economic Factors Impacting GBP

• The recent Nonfarm Payrolls report shows a strong performance, with the US adding 254K jobs in September, surpassing expectations.
• Average Hourly Earnings have increased to 4.0% YoY from 3.9%, indicating robust wage growth.
• The US Unemployment Rate has dropped to 4.1%, further supporting the USD strength.

Bank of England's Dovish Stance

• The potential for GBP's upside is limited due to the dovish tone from the Bank of England (BoE).
• BoE Governor Andrew Bailey hinted at a more aggressive approach to rate cuts as inflation data looks favorable.
• Market expectations are mixed regarding further rate cuts in upcoming months.

Conclusion

• Overall, while GBP/USD shows minor gains, it faces significant resistance due to strong US economic data and a cautious outlook from the BoE.