|

British Pound rallies as weak NFP smashes Fed hike bets

  • NFP misses forecasts, with prior months revised sharply lower.
  • Fed tightening bets ease as yields pressure the US Dollar.
  • Political uncertainty and rumors of intervention keep Cable volatility elevated.

The Pound Sterling (GBP) registers solid gains against the US Dollar (USD) on Thursday after the latest US employment report missed estimates, reducing the chances of a Federal Reserve (Fed) rate hike. At the time of writing, the GBP/USD pair trades at 1.3359, down 0.64%, its highest level over the last ten days.

GBP/USD gains as soft payrolls drag Dollar and yields lower

The US jobs market weakened slightly in June, with Nonfarm Payrolls coming at 57K below estimates of 110K. May's numbers were downwardly revised from 172K to 129K, and April’s data were revised from 179 K to 148 K. The Unemployment Rate ticked lower from 4.3% to 4.2%, but analysts blame it on a decline in labor force participation, which reached 61.5%, the lowest since March 2021.

Money markets adjusted their Fed hawkish bets, with investors expecting just 23 basis points of tightening towards the end of the year, according to Prime Terminal data.

US Treasury yields are aiming lower, with the 10-year T-note yields at 4.461%, down 2 basis points, a headwind for the Greenback. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is down 0.65% at 100.75.

US Factory Orders contracted in May, due to a decline in commercial aircraft orders, with the numbers dropping to -1.3%, below estimates of -1.8% but down from April’s stellar 5.3% print.

San Francisco Fed's Mary Daly commented that she sees positive signs about the US economy and recognised that higher prices were caused by tariffs and the Oil price shock. She added that the policy is “slightly restrictive,” yet noted that there are scenarios in which the Fed must fight inflation.

In the UK, the economic schedule was absent, but the focus is on Andy Burhnamw, the favorite to succeed the current Prime Minister Keir Starmer.

Traders remain cautious about Cable amid uncertainty over Burnham’s policies. Meanwhile, the GBP remains boosted by the fall in Oil prices and by rumors of Japanese authorities intervening in the foreign exchange markets, as the USD/JPY pair fell from around 162.50 to 160.95 at the time of writing.

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

On the daily chart, GBP/USD trades at 1.3362, holding a bearish near-term bias as spot remains capped beneath the cluster of simple moving averages (50, 100 and 200) around 1.3413 and below the descending resistance trend line projected from 1.3522. The pair has slipped away from prior highs while the Relative Strength Index (14) at 54 stays just above its neutral line, hinting at modest rather than aggressive upside momentum that so far fails to overcome the overhead structure.

On the topside, initial resistance is located at the triple simple moving average area near 1.3413, with the next barrier coming at the descending trend resistance around 1.3522. On the downside, the key technical floor is the rising support trend line originating near 1.3159, where a decisive break would reinforce the broader bearish tone and expose lower levels, while holding above it would keep the pair bounded in a corrective consolidation under the moving averages.

(The technical analysis of this story was written with the help of an AI tool.)

Pound Sterling Price This week

The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.47%-1.13%-0.50%-0.07%-0.56%-0.97%-0.98%
EUR0.47%-0.72%-0.02%0.35%-0.12%-0.56%-0.56%
GBP1.13%0.72%0.75%1.07%0.59%0.16%0.15%
JPY0.50%0.02%-0.75%0.41%-0.08%-0.38%-0.52%
CAD0.07%-0.35%-1.07%-0.41%-0.48%-0.79%-0.84%
AUD0.56%0.12%-0.59%0.08%0.48%-0.43%-0.44%
NZD0.97%0.56%-0.16%0.38%0.79%0.43%-0.03%
CHF0.98%0.56%-0.15%0.52%0.84%0.44%0.03%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Week ahead: Summer lull could be tested by geopolitics and central bank expectations
It has been a relatively monotonous week, with the US dollar desperately trying to recover from last Friday’s nonfarm payrolls-induced losses, the main equity indices trading mostly sideways amidst a quiet earnings calendar, and sovereign bond yields reminding everyone of their pivotal role in the current financial system. These market moves are partly connected to the Middle East developments.
 Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?
Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.