The GBP/USD currency pair settled above Friday’s low of 1.3259, its weakest level since April 24th, as the US Dollar failed to draw support from the latest solid US employment numbers.
According to Monex Europe analyst Nick Rees, sentiment rather than hard data was probably driving “much of the doom and gloom narrative” for the greenback.
Employers in all sectors of the US economy, excluding farming, added 177,000 job positions in April, slowing from the revised down 185,000 in March. Still, job growth surpassed market consensus of 130,000.
The latest figure also came relatively close to the average monthly gain of 152,000 over the past 12 months, despite uncertainty in regard to the Trump administration’s aggressive tariff policy.
Average hourly earnings grew 3.8% YoY in April, matching the rate in March.
Yet, the jobs report does not reflect the full impact of the tariffs, which the Trump administration imposed on April 2nd.
The data cemented expectations that the Federal Reserve will likely keep interest rates on hold next week.
Markets are now pricing in an about 50% chance of a Fed rate cut occurring as early as June, down from 60% prior to the data release.
About 85 basis points of rate cuts by year-end are now priced in, compared to 100 bps previously.
Meanwhile, the Pound received a boost from higher investor risk appetite following recent reassuring comments from China’s Commerce Ministry. According to a Bloomberg report, Thursday saw the ministry signal openness to engaging in negotiations with Washington, emphasizing that any discussions should be rooted in “sincerity.”
The remarks were received positively by investors, who interpreted them as a constructive sign amid the ongoing trade tensions between the US and China.
However, the upside for the Sterling may be limited, as investors increasingly expect the Bank of England to lower interest rates at its upcoming policy meeting.
The GBP/USD currency pair settled with no change at 1.3268 on Friday.
The major Forex pair lost 0.27% for the week.
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