GBP rose against the US Dollar in Thursday’s North American session after fresh US jobs data weakened the USD. This came even after a strong Nonfarm Payrolls report the day before.
UK growth was weaker than expected, but the Pound still held onto its gains. GBP/USD traded at 1.3664, up 0.28%.
Relative Surprises Drive Currency Moves
Looking back at 2025, the Pound rose against the Dollar even though UK GDP was weak. Markets paid more attention to unexpectedly high US jobless claims, which pushed the Dollar lower at the time. This shows that short-term currency moves often come from data surprises, not just overall economic strength.
Now the story has changed. The main driver is a clearer split in central bank policy. The Bank of England has stayed cautious, keeping its bank rate at 4.5% at its last meeting. The US Federal Reserve has signaled a pause in its easing cycle. This policy gap is now the key driver for GBP/USD, which is trading much lower—around 1.2850.
Recent Office for National Statistics data showed UK Q4 2025 GDP growth at a weak 0.1%, confirming a soft domestic backdrop. By comparison, the latest US GDP report showed 1.9% annualized growth, supporting the Dollar. This broader economic picture is weighing on Sterling more than short-term shifts in labor data.
For derivatives traders, this points to continued pressure on the Pound. Implied volatility in GBP/USD options has been rising, with three-month contracts recently at 8.9%. This reflects uncertainty about the Bank of England’s next move. One approach is to buy put options to hedge risk—or to position for a break below the key 1.2800 support level.
Labor Markets Remain A Key Watch
Labor markets still matter, since they were the main focus in the 2025 report. Last week, US jobless claims dropped to 205,000, a very low level that suggests the US labor market remains tight. This contrasts with the UK unemployment rate, which has edged up to 4.4%. That gap supports the case for a firmer Dollar in the weeks ahead.
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