- The Pound Sterling corrects to near 1.3535 against the US Dollar as the Greenback gains ground ahead of the US NFP data release for May.
- The US Dollar attracted bids after US President Trump expressed confidence over the Sino-US trade talks.
- Data from a survey shows that the number of UK firms worried about US tariffs declined sharply following the UK-US trade agreement.
The Pound Sterling (GBP) retraces to near 1.3535 against the US Dollar during the European trading session on Friday, falling from a fresh three-year high of 1.3620 posted the previous day. The GBP/USD pair faces selling pressure as the US Dollar (USD) gains ground ahead of the United States (US) Nonfarm Payrolls (NFP) data for May, which will be published at 12:30 GMT.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks up to near 98.85.
The US official employment data is expected to influence the next move in the US Dollar as it will likely impact market expectations for the Federal Reserve’s (Fed) monetary policy outlook. According to the estimates, US employers are expected to have hired 130K fresh workers, lower than the 171K added in April. The Unemployment Rate is seen as steady at 4.2%.
Average Hourly Earnings data, a key measure of wage growth, is estimated to have risen 3.7% on year, slower than 3.8% increase in April. Month-on-month, wage growth is expected to come in at 0.3%, faster than the prior reading of 0.2%.
This week, traders raised bets that the Fed will cut interest rates in July after the ADP Employment Change and ISM Purchasing Managers’ Index (PMI) data for May exhibited poor labor demand and a decline in economic activity. According to the CME FedWatch tool, the probability of the Fed lowering interest rates in the July meeting has increased to 32.8% from 22.5% a week ago.
However, in their public speeches, Fed officials are still endorsing a wait-and-see approach on interest rates, citing upside risks to inflation due to the US President Donald Trump’s tariff policy and the apparent resilience in labor demand.
“I see greater upside risks to inflation and potential downside risks to employment and output growth,” Fed Governor Adriana D. Kugler said at the Economic Club of New York on Thursday. She added that the labor market appears “resilient and stable”, and the economic activity continues to grow but at a “more moderate pace than the second half of 2024”.
FXStreet’s speech tracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Kugler’s words as hawkish with a score of 6.4.”
Daily digest market movers: Pound Sterling edges lower despite traders pare BoE dovish bets
- The Pound Sterling edges down against its major peers on Friday. The British currency falls despite traders have pared bets supporting another BoE interest-rate cut this month due to accelerating inflationary pressures. During the last meeting, when the UK central bank cut rates by 25bps to 4.25%, the BoE guided a “gradual and careful” monetary expansion approach.
- The Bank of England’s (BoE) latest Decision Maker Panel survey shows that the number of firms citing US trade policy as a major concern has decreased. According to the survey, the percentage of firms citing international risk as one of the top three concerns has been reduced to 12% from 22% seen last month following the trade agreement between the UK and the US.
- Trade tensions between Washington and Beijing have also eased somewhat after a post from US President Donald Trump on Truth.Social confirmed a call with Chinese President Xi Jinping and suggested that trade negotiations between the two nations would proceed smoothly. “The call lasted approximately one and a half hours and resulted in a very positive conclusion for both countries,” Trump wrote.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.16% | 0.46% | 0.03% | 0.19% | -0.04% | 0.22% | |
| EUR | -0.17% | 0.00% | 0.26% | -0.13% | -0.03% | -0.19% | 0.04% | |
| GBP | -0.16% | -0.01% | 0.25% | -0.13% | -0.03% | -0.19% | 0.04% | |
| JPY | -0.46% | -0.26% | -0.25% | -0.37% | -0.14% | -0.37% | -0.30% | |
| CAD | -0.03% | 0.13% | 0.13% | 0.37% | 0.15% | -0.06% | 0.17% | |
| AUD | -0.19% | 0.03% | 0.03% | 0.14% | -0.15% | -0.16% | 0.08% | |
| NZD | 0.04% | 0.19% | 0.19% | 0.37% | 0.06% | 0.16% | 0.23% | |
| CHF | -0.22% | -0.04% | -0.04% | 0.30% | -0.17% | -0.08% | -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).
Technical Analysis: Pound Sterling corrects to near 1.3535
The Pound Sterling retraces to near 1.3550 against the US Dollar on Friday, holding above the key horizontal support plotted from the September 26 high of 1.3434. The outlook for the pair remains firm as the 20-day Exponential Moving Average (EMA) slopes higher around 1.3443.
The 14-day Relative Strength Index (RSI) is around 60.00, suggesting that a bullish momentum is intact.
On the upside, the January 13, 2022, high of 1.3750 will be a key hurdle for the pair. Looking down, the 20-day EMA will act as a major support area.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation.
A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work.
The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower.
NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa.
Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold.
Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components.
At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary.
The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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