GBP/USD falls as solid US jobless claims data cools July Fed cut hopes
- GBP/USD tumbles below 1.3600 as US Initial Jobless Claims drop to 227K, below forecast and prior week.
- Fed officials caution that tariffs and a weak Dollar could fuel inflation.
- UK data remains light; traders await GDP and industrial output figures.
The Pound Sterling (GBP) trades with losses of 0.27% on Thursday after a jobs report in the United States (US) revealed that the labor market is solid, reducing the chance of a rate cut by the Federal Reserve (Fed) at the July meeting. At the time of writing, GBP/USD is trading at 1.3550, having reached a high of 1.3619.
Sterling dips to 1.3550 as solid jobless claims dent dovish bets, UK macro outlook remains subdued
The Cable is down so far over 0.65% during the week amid a scarce docket in the UK. The US Department of Labor (DoL) reported that Initial Jobless Claims for the week ending July 5 decreased to 227,000 from 233,000 the previous week, and were below the forecasted 235,000.
Although the data suggests some strength in the labor market, Continuing Claims rose to its highest level in three and a half years, up to 1.97 million in the previous week.
Lately, Fed Chair Jerome Powell pointed out that in the current low-hiring and low-firing environment, any increase in layoffs could rapidly push up the unemployment rate.
In the meantime, St. Louis Fed President Alberto Musalem stated that the economy is in a good place and that the labor market is at or near full employment. He added that risks on inflation are tilted to the upside due to tariffs, that their effect has not been seen, and a weakened US Dollar could add to inflation.
Ahead, the economic docket will feature Fed speakers, led by Governor Christopher Waller and San Francisco Fed President Mary Daly. Across the pond, the UK schedule will unveil Gross Domestic Product (GDP) figures and Industrial and Manufacturing Production.
GBP/USD Price Forecast: Technical outlook
The GBP/USD daily chart remains upwardly biased, although it faces strong resistance at the 20-day SMA at 1.3592. Once the pair fell below the latter, it opened the chance to challenge the 1.3500 figure ahead of the 50-day SMA at 1.3487.
Nevertheless, the ongoing pullback seems to be fading, even though the Relative Strength Index (RSI) turned bearish, but remains shy of cracking the 40 level. If cleared, it would signal that sellers are decisively outpacing buyers.
On the upside, a recovery of 1.3600 opens the path to test the current week’s high of 1.3657.
British Pound 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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.86% | 0.68% | 1.63% | 0.67% | -0.02% | 0.86% | 0.52% | |
| EUR | -0.86% | -0.16% | 0.51% | -0.22% | -0.81% | -0.00% | -0.36% | |
| GBP | -0.68% | 0.16% | 0.66% | -0.03% | -0.64% | 0.17% | -0.31% | |
| JPY | -1.63% | -0.51% | -0.66% | -0.71% | -1.40% | -0.52% | -1.02% | |
| CAD | -0.67% | 0.22% | 0.03% | 0.71% | -0.66% | 0.21% | -0.28% | |
| AUD | 0.02% | 0.81% | 0.64% | 1.40% | 0.66% | 0.92% | 0.35% | |
| NZD | -0.86% | 0.00% | -0.17% | 0.52% | -0.21% | -0.92% | -0.48% | |
| CHF | -0.52% | 0.36% | 0.31% | 1.02% | 0.28% | -0.35% | 0.48% |
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
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
