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British Pound rises as soft ADP jobs report weighs on Dollar, NFP looms

  • GBP/USD advances as ADP miss pressures the US Dollar for the second day.
  • ISM Services expands, but employment weakness raises labor-market concerns.
  • Fed officials remain hawkish as traders await Friday’s NFP.

The Pound Sterling (GBP) advances some 0.12% on Wednesday as the US Dollar (USD) registers back-to-back days of losses, after US jobs data was softer than expected, even though business activity in the services sector continues to expand solidly. The GBP/USD pair trades at 1.3467.

GBP/USD gains as weak US hiring data offsets resilient services activity

The ADP Employment Change report in July was softer than expected, with the print easing from 98K to 44K, below forecasts of 70K. The data showed that education and health services added 36K people to the workforce, while leisure and hospitality cut 11K, mostly due to the recently finished World Cup.

Aside from this, the ISM Services PMI in July remained in expansion territory, up from 54 to 54.1, below forecasts of 54.5. The sub-components of employment and prices paid contracted and expanded, respectively. The Employment diffusion index dipped from 51.2 to 47.4, while the Prices Paid rose from 67.7 to 70.3, extending the trend to 110 months.

Now eyes turn to the Nonfarm Payrolls figures on Friday. Market participants estimate that the US economy created 80K jobs in July, up from June's 57K. The Unemployment Rate is expected at 4.2%, unchanged from the previous month.

Federal Reserve officials remain split

Minneapolis Federal Reserve (Fed) President Neel Kashkari said that now is the time to begin slowly increasing rates, as he advocates not dramatic rate hikes. At the same time, Jeffrey Schmid of the Kansas City Fed stated that tight monetary policy is needed to tackle “too high” inflation.

Aside from this, geopolitics are playing a critical role. The de-escalation of the conflict between the US and Iran and the resumption of talks are a tailwind for risk-sensitive currencies like the Pound Sterling.

In the UK, a report from The Times revealed that officials at the UK Treasury are looking for ways to raise billions of GBP, using flexibility, within the government´s fiscal rules.

UK data released by S&P Global showed that the services sector expanded last month, after contracting in June.

GBP/USD Price Forecast: Technical outlook

Chart Analysis GBP/USD
GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3463. The pair maintains a constructive bullish bias as it holds above the clustered simple moving averages (SMA) around 1.3364 and has pushed beyond the prior descending trend-line break near 1.3443, which now acts as nearby support. Daily Relative Strength Index (RSI) at about 57 stays in positive territory without yet signaling overbought conditions, suggesting room for further upside while the broader structure remains supported above the 1.33 area.

On the topside, initial resistance emerges at the descending trend line stemming from 1.3653, whose break level sits near 1.3525, ahead of the higher former support trend-line break around 1.3551. On the downside, immediate support is seen at the reclaimed downtrend break near 1.3443, followed by the SMA cluster around 1.3364, with a deeper structural floor coming in at the earlier rising trend-line break close to 1.3312; a daily close below this latter zone would significantly undermine the current bullish tone.

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

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 New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.04%0.25%0.30%0.04%-0.15%0.40%0.16%
EUR-0.04%0.22%0.31%0.02%-0.08%0.37%0.13%
GBP-0.25%-0.22%-0.25%-0.20%-0.30%0.15%-0.08%
JPY-0.30%-0.31%0.25%-0.19%-0.31%0.20%-0.04%
CAD-0.04%-0.02%0.20%0.19%-0.10%0.40%0.12%
AUD0.15%0.08%0.30%0.31%0.10%0.44%0.20%
NZD-0.40%-0.37%-0.15%-0.20%-0.40%-0.44%-0.23%
CHF-0.16%-0.13%0.08%0.04%-0.12%-0.20%0.23%

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.

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