GBP/USD rose during the North American session on Wednesday, but later gave back part of the move after a stronger-than-expected US jobs report lowered expectations for Federal Reserve rate cuts.
The pair retreated from a daily high of 1.3712 and was trading at 1.3655 at the time of writing, up 0.10%.
Us Jobs Report Shifts Rate Cut Odds
Expectations have shifted sharply after a blockbuster US Non-Farm Payrolls report. Payrolls rose by more than 350,000, far above the 180,000 expected. This surprise strength has materially changed the outlook for a Federal Reserve rate cut in March. As a result, the market-implied probability of a March cut has dropped from above 70% to below 40%.
This abrupt repricing suggests GBP/USD volatility could increase in the coming weeks. The 1.3712 high now acts as a key resistance level and may be hard to break. One potential approach is to sell out-of-the-money call options with strike prices above 1.3725 to collect premium if upside remains limited.
US Dollar strength also contrasts with recent UK inflation data. Last week, UK inflation came in below forecasts at 2.1%. This gap in economic momentum supports the case for a weaker Pound versus the Dollar. Traders may also consider buying put options to benefit from a possible pullback toward the 1.3500 level.
A similar pattern appeared in the third quarter of 2025. At that time, a run of strong US data repeatedly pushed back rate-cut expectations and capped GBP/USD rallies. If the current US data trend continues, it could keep the Pound under pressure for a full quarter.
Historical Parallel Points To Continued Pressure
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