The Pound Sterling has dropped for the third day in a row, down about 0.10%. This decline is due to strong US jobs data, indicating a healthy labor market, which lowers the chances of Federal Reserve rate cuts this year. Currently, GBP/USD is at 1.3444, after hitting a high of 1.3465 earlier. The GBP/USD is feeling pressure as the US Dollar gains strength, boosted by better-than-expected US ISM Services PMI data for December. During Thursday’s European trading session, the pair hovered around 1.3450.

Focus On Upcoming US Economic Data Releases

Traders are being cautious as they await key US economic data. The weekly US Initial Jobless Claims report and the expected Nonfarm Payrolls (NFP) figure will be released later this week and are closely watched by the market. The Pound Sterling has weakened against the dollar for a third consecutive day, now around 1.3444. This trend is driven by a strong US labor market, highlighted by a recent ADP report showing an increase of 195,000 private sector jobs, surpassing expectations. This firm job growth delays any potential rate cuts by the Federal Reserve. It’s not just the Pound that’s affected; the strengthening US Dollar is also pushing the Euro down toward 1.1640. Looking back from our perspective in 2025, this situation resembles the 2022-2023 period when stubborn inflation and a tight labor market led to the Fed maintaining a restrictive policy. This historical context suggests that the dollar’s strength could continue if the upcoming Nonfarm Payrolls report supports this trend.

Positioning For Further Downside

With the eagerly awaited Nonfarm Payrolls data coming soon, it may be wise to prepare for further declines. Buying puts on the GBP/USD with a strike price below 1.3400 could be a smart way to take advantage of a stronger-than-expected jobs report. This strategy offers defined risk before a potentially volatile market event. After this week’s jobs report, attention will quickly shift to inflation data. The last report from December 2025 showed core CPI stubbornly at 3.1%, still above the Fed’s target. If the labor market remains strong, it will be challenging for the Federal Reserve to justify easing its policy anytime soon. Create your live VT Markets account and start trading now.

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