Sterling rose against major currencies in Friday’s European session. It was up 0.43% to about 1.3610 versus the US Dollar, as demand for risk-sensitive assets stayed firm on hopes of a US–Iran diplomatic outcome.
S&P 500 futures were 0.55% higher near 7,375 ahead of the US April Nonfarm Payrolls release at 12:30 GMT. The US Dollar Index (DXY) was 0.3% lower near 97.95.
Market Focus Shifts To Us Jobs Data
Expectations that a month-long US–Iran ceasefire remains in place continued after President Donald Trump told ABC News that strikes near the Strait of Hormuz were not intended to restart the war. Market focus is now on US jobs data for signals on the Federal Reserve’s policy outlook.
The CME FedWatch tool shows expectations for the Fed to keep interest rates at current levels through year-end. The April NFP report is forecast to show 62K new jobs, down from 178K in March.
The Unemployment Rate is expected to hold at 4.3%. Average Hourly Earnings are forecast to rise 3.8% year-on-year, up from 3.5% previously.
We see the Pound Sterling showing strength, a situation that reminds us of similar risk-on dynamics we observed back in 2025. That period was driven by geopolitical relief, much like the temporary US-Iran de-escalation during the Trump administration. Today, on May 8, 2026, the drivers are different, focusing more on fundamental economic divergence.
Traders should consider that broad market sentiment is now less about global diplomacy and more about the policy gap between the Bank of England (BoE) and the US Federal Reserve. While last year saw both central banks holding rates, recent data shows UK inflation persisting at 2.9%, slightly above the US reading of 2.7%, making the BoE’s path less certain. This divergence suggests that derivative plays on the GBP/USD pair have more to do with monetary policy than general risk appetite.
Options Positioning Ahead Of Boe Meeting
Given this, we should be looking at options to manage risk around upcoming central bank announcements. Implied volatility in GBP options is rising ahead of the BoE meeting next week, suggesting the market is pricing in a potential move. A strategy of buying GBP call options with a one-month expiry could capture upside if the BoE signals it will hold rates for longer than the Fed, while keeping the initial cost limited.
We must also shift our focus from the employment data that once dominated trading decisions. Looking back to 2025, we recalled periods where a Nonfarm Payrolls report showing job growth as low as 62K would have caused extreme volatility. Today, with the US unemployment rate stable at 3.8% for the last quarter, the market is far more sensitive to inflation reports, as they are the primary catalyst for any change in Fed policy.
