The GBP/USD exchange rate has risen past 1.3200 due to weak US jobs data, reversing its earlier downward trend. The Pound gained momentum as the US Dollar weakened following disappointing Nonfarm Payrolls (NFP) results. Earlier, during European trading, the Pound fell to about 1.3160, its lowest level in nearly 11 weeks against the Dollar. After the US employment data was released, traders reacted quickly, raising expectations for a possible interest rate cut by the Bank of England.

Market Anticipation During Asian Session

In the Asian session, GBP/USD hovered around 1.3195, amid expectations for US employment figures, including the NFP and Unemployment Rate. This data, released later, caused a lot of market movement as views on Federal Reserve policies changed. Meanwhile, the EUR/USD increased above 1.1550, boosted by the weak US jobs report. Gold also reached a weekly high of around $3,350, benefiting from lower US Treasury yields. Despite challenges, the Eurozone economy showed signs of strength, with possibilities for further interest rate changes. Foreign exchange trading remains high-risk, so understanding the market is essential. Each price movement reflects broader economic indicators and changes in policy expectations.

Strategic Market Considerations

The poor US jobs report from Friday, August 1st, has shifted our outlook. Nonfarm Payrolls rose only 95,000 when 180,000 was expected, leading to noticeable US Dollar weakness. This has allowed GBP/USD to surpass the 1.3200 resistance level, hinting at more short-term gains. However, we should be aware of opposing pressures from the Bank of England. Speculations about a potential rate cut to support the UK economy could limit the Pound’s rise. Therefore, we expect increased volatility for GBP/USD, and strategies that take advantage of sharp price movements might be beneficial. The Euro is also benefiting from the Dollar’s decline, with EUR/USD now firmly above 1.1550. Recent data showed Eurozone inflation steady at 2.4%, giving the European Central Bank less reason to cut rates compared to others. This difference in policy could strengthen the Euro against the Dollar in the coming weeks. We are closely monitoring gold, which is thriving in this environment, closing the week around $3,350. The drop in US 10-year Treasury yields below 3.85% is the main factor, making gold— which doesn’t pay interest— more appealing. This rally resembles the one we witnessed in early 2024 when expectations for rate cuts began to rise. The market is now pondering the Federal Reserve’s next steps before its September meeting. Last week, the chance of another rate hike was over 60%, according to CME FedWatch data, but it has now dropped below 30%. This uncertainty suggests we should brace for ongoing volatility across all major assets. Create your live VT Markets account and start trading now.

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