GBP/USD tooks the sluggish moment ahead of frin NFR data and demotion of Rishi Sunak. The US economy added more jobs than expected in July as employment rose by 943,000. There were gains in sectors including leisure and hospitality, education and professional services. Forecasts for jobs created last month had varied widely from 350,000 to 1.6 million, with a consensus of 870,000. But the figures mainly pre-date the rise of the Delta variant of Covid in the US which has led to a surge in infections. There are also fears new restrictions could be imposed.

The hiring in July helped lower the unemployment rate by 0.5 percentage points to 5.4%. In all, 8.7 million people remain unemployed, down considerably from the highs seen in April last year. However, that is still well above the pre-pandemic measure of 5.7 million in February 2020. Despite the concerns about Delta, economists said the figures hinted at the underlying strength of the economy’s recovery.

The Fed has made the labor market recovery a condition of tighter monetary policy, and most officials back the view that a jump in inflation will prove transitory, though there is debate over how prolonged it could be. Last week, Fed Vice Chair Richard Clarida suggested that conditions for hiking interest rates might be met as soon as late 2022. The U.S. Senate on Sunday took two more steps toward passing a $1 trillion bipartisan infrastructure bill by blessing the details of the largest U.S. investment in roads and bridges in decades and by moving to limit debate on the overall measure.

The central bank has turned the labor market recovery into a condition of tighter monetary policy, and most officials support the idea that the impact of inflation will be temporary, although there is debate as to how long it will last. Last week, central bank vice president Richard Clarida suggested that the conditions for raising interest rates could be met in late 2022. The US Senate on Sunday took two more steps and blessed the $ 1 trillion bipartisan infrastructure bill with details of the largest US investment in roads and bridges in decades and by moving to limit debate on the overall measure.

On the other hand Rishi Sunak ‘will not take a demotion’ despite claims of a rift between him and Boris Johnson, a source has said. Allies of the Chancellor warned that sacking Mr Sunak would see the Prime Minister ‘lose direction completely’ as they hit back at claims Mr Johnson threatened to demote him to Health Secretary. It comes after Mr Johnson reportedly ‘went tonto’ in front of staff at a Downing Street meeting last week about the leak of a letter from the Chancellor calling for the easing of travel restrictions ahead of the relaxations announced last Wednesday.

The Prime Minister reportedly told allies that Mr Sunak was guilty of ‘a failure of political judgment’ in writing the letter.  He suggested demoting the Chancellor to Health Secretary – seen as one of the least desirable jobs in Government – at a meeting last Monday, it was reported.  However an ally of Mr Sunak has said the chancellor he would never agree to such a move and would opt for the back benches over a demotion. If he loses Rishi, he loses direction completely. The sources have been found on the Times.

GBP/USD 4 Hour Chart:

Support: 1.3848 (S1), 1.3819 (S2), 1.3776 (S3).

Resistance: 1.3920 (R1), 1.3962 (R2), 1.3992 (R3).

Amidst this above catalyst the hiring in July helped lower the unemployment rate which is favor for US dollar. We expect bearish trend for GBP/USD.