GBP/USD establishes above 1.2000 despite UK political instability, US NFP in focus

• GBP/USD is firmly balancing above 1.2000 despite the turmoil in the UK Parliament.
• UK PM Boris Johnson has also announced his resignation from his post.
• Lower expectations for the US NFP have brought exhaustion signals in the DXY.

The GBP/USD pair is advancing modestly towards the critical resistance of 1.2050 as the asset has extended Thursday’s bullish bias. The pound bulls have overstepped Thursday’s high at 1.2020 comfortably despite the turmoil of the dominant government in the UK economy.

After a spree of resignations from the delegates of the UK’s Conservative Party, the political situation turned unstable. Lower confidence of the ministers in the leadership of UK PM Boris Johnson forced the former to put resignations at the table. This has been followed by the resignation itself of the UK PM and he will handle the chair until the appointment of a new PM in the country.

Meanwhile, the US dollar index (DXY) is displaying exhaustion signals after printing a fresh 19-year high at 107.26 on Wednesday. The DXY is losing momentum as the market participants are discounting the consecutive 75 basis points (bps) rate hike by the Federal Reserve (Fed) and the lower expectations for the US Nonfarm Payrolls (NFP).

Considering the estimates, the US economy has created 270k jobs in June, lower than the prior release of 390k. The jobless rate may remain stable at around 3.6%. This may compel the Fed to announce one more bumper rate hike in July with extreme precautions as more policy tightening may result in lose strings in the tight labor market.