The British Pound has gained momentum, rising above 1.3200 against the US Dollar. This increase follows disappointing US Nonfarm Payrolls (NFP) data, which showed only 73,000 new jobs created in July, well below the expected 110,000. The dollar is under pressure as unemployment rose to 4.2% from 4.1%. This shift has led many to rethink the chances of the Federal Reserve cutting interest rates in September. As a result, GBP/USD hit two-day highs after the US Dollar Index fell.

Technical Analysis and Market Reactions

If GBP/USD continues to drop, it might test support levels at 1.3141 and 1.3139. On the other hand, resistance levels are at the 100-day and 55-day SMAs at 1.3337 and 1.3505, respectively, before reaching the weekly high of 1.3588. Nonfarm Payrolls is a monthly report that tracks job changes in the US, excluding the farming sector. NFP data influences US monetary policy, where less job growth could lead to lower interest rates. Typically, a strong NFP report supports the US Dollar, impacting inflation and interest rates, while often negatively affecting Gold prices. However, market responses can be unpredictable, especially if figures like Average Weekly Earnings overshadow NFP numbers. The disappointing jobs report, which revealed only 73,000 new jobs, has shifted momentum to the British Pound. This big miss has pushed the pound above the 1.3200 mark against the dollar, challenging the idea of a strong US labor market.

Central Bank Policies Diverge

This report is significant and follows the US Consumer Price Index data for June 2025, which showed inflation slowing to 3.1%. The combination of weaker hiring and lower inflation is changing how the Federal Reserve may act. Futures markets, monitored by the CME FedWatch Tool, now suggest a 25% chance of a rate cut in September, up from just 5% before this jobs report. Meanwhile, the Bank of England is also grappling with stubborn domestic inflation, unlike in the US. This difference in monetary policy—where the Fed may ease while the BoE holds firm—supports the case for a stronger GBP/USD. This scenario feels similar to the policy split we observed in late 2023. Given this outlook, we believe buying call options on GBP/USD with September or October expiration dates is a smart strategy. This approach allows us to benefit from the potential rise of the pound while limiting our maximum loss to the premium we pay for the options. The weak NFP figure is the catalyst we’ve been waiting for to adopt a bullish stance. We should use the technical levels as our guidelines for this trade. The first goal for our call positions is the resistance near the 100-day moving average at 1.3337. If the pair manages to break and hold above this level, it could move toward the 1.3500 area. However, we must remember that initial reactions to job data can be exaggerated. We should closely monitor upcoming US retail sales figures for confirmation that the American consumer is indeed weakening. Any unexpectedly strong US economic data in the coming weeks could quickly reverse this move and challenge our bullish outlook. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now