- GBP/USD rejected at 5-day MA hurdle amid Sino-US trade tensions.
- US 10-year bond yield fell 20 basis points on Thursday but failed to put a strong bid under GBP/USD.
- A weaker-than-expected US jobs data could yield a corrective rally in the GBP/USD pair.
GBP/USD remains on the defensive ahead of the London open despite the overnight slide in the US treasury yields.
The yield on the 10-year treasury note fell almost 20 basis points on Thursday and is currently trading at 1.88%, the lowest level since November 2016.
The benchmark yield fell on increased haven demand for treasuries after the US President Donald Trump ratcheted up trade tensions by stating that the US will impose a new 10% tariff on $300 billion worth of products imported from China as Beijing is not living up to the promises made during recent trade negotiations.
The drop in the US yields, however, did little to strengthen the bid tone around GBP/USD.
The currency pair faced rejection near the downward sloping (bearish) 5-day moving average at 1.2950 in early Asia and was last seen trading at 1.2102, representing 0.17% losses on the day.
The GBP may remain under pressure in Europe unless the UK construction PMI (Jul) blows past expectations, in which case the pair could chart a minor recovery rally.
Focus on the US non-farm payrolls
The data due at 12:30 GMT is expected to show the US economy added 164K jobs in July, having added 224K jobs in June.
The jobless rate is forecasted to remain steady at 3.7%. The average hourly earnings are forecasted to rise 3.2% year-on-year in July, following a 3.1% rise in June.
A weaker-than-expected labor market data coupled with heightened trade tensions will likely trigger expectations of aggressive easing by the US Federal Reserve in the next few months, possibly leading to deeper losses in the US yields and the US Dollar.