Weak NFP Sends GBP/USD Flying as Fed Hike Bets Crack

GBP/USD rallied to its strongest level in ten days after a weak US payrolls print hit Federal Reserve hike bets, giving currency traders a clear reason to sell the US Dollar.

The Pound Sterling posted solid gains against the Dollar on Thursday after the latest US employment report missed estimates, according to FXStreet. At the time of writing, FXStreet put GBP/USD at 1.3359, describing it as the pair’s highest level over the last ten days.

GBP/USD jumps against the US Dollar after weak US jobs report hits Fed rate hike bets

The trigger was simple: US hiring came in soft enough to make another Fed hike harder to defend.

Nonfarm Payrolls rose by 57K in June, well short of estimates for 110K. The prior months also looked weaker after revisions. May was cut from 172K to 129K, while April was revised from 179 K to 148 K.

That combination matters more than the headline miss alone. One weak month can be noise. A weak month plus downward revisions makes the labor market look less resilient than traders thought.

The unemployment rate did not tell the full story

The Unemployment Rate ticked down from 4.3% to 4.2%, but FXStreet said analysts blamed that drop on weaker labor force participation. Participation fell to 61.5%, the lowest since March 2021.

The live question for GBP/USD traders is whether the Fed treats the report as a warning sign or a one-off wobble.

Money markets moved fast. Investors now expect just 23 basis points of tightening toward year-end, according to Prime Terminal data cited by FXStreet. That repricing cut into the Dollar’s rate support and helped Cable extend its move higher.

Soft NFP data pressures the Dollar as traders reprice the Federal Reserve outlook

The Dollar sold off as rate-sensitive markets dialed back hawkish Fed bets. The US Dollar Index (DXY) fell 0.65% to 100.75, while the 10-year T-note yield slipped 2 basis points to 4.461%.

That is the core chain reaction. Softer payrolls reduce the pressure for tighter policy. Lower expected tightening weighs on yields. Lower yields weaken the Dollar. GBP/USD benefits, even if the UK side of the trade has not produced fresh good news.

XOOMAR analysis: This is mainly a Dollar story. Sterling is rising because the US side of the pair just lost support, not because the source material shows a new UK growth impulse or a stronger Bank of England signal.

FXStreet also reported that US Factory Orders contracted in May, with the figure dropping to -1.3%, compared with estimates of -1.8% and April’s 5.3% print. The decline was tied to weaker commercial aircraft orders.

San Francisco Fed President Mary Daly offered a more balanced read on policy and inflation pressure.

Daly said policy is “slightly restrictive,” while noting there are scenarios in which the Fed must fight inflation.

That comment leaves room for caution. The jobs report damaged hike expectations, but it did not remove inflation risk from the Fed debate.

For related Dollar-sensitive setups, XOOMAR is also tracking Weak Jobs Data Knocks USD/CAD Into Loonie Comeback and NZD/USD Jumps as Weak US Data Sets Payrolls Trap for Bulls.

GBP/USD traders turn to Fed signals, UK politics, and Bank of England rate expectations

The UK calendar was empty in the FXStreet report, which makes the Pound’s move more dependent on external drivers. Traders were also cautious around Cable because of uncertainty over Andy Burnham, described in the source as the favorite to succeed current Prime Minister Keir Starmer.

So the next question is blunt: can GBP/USD keep climbing if the UK side remains politically cloudy?

FXStreet said the Pound was also helped by falling oil prices and rumors of Japanese authorities intervening in foreign exchange markets. The USD/JPY pair fell from around 162.50 to 160.95 at the time of writing, adding pressure to the broader Dollar tone.

Pound strength was broad this week

FXStreet’s weekly currency table showed the Pound as strongest against the Dollar among the listed majors.

The technical picture is less clean than the headline rally. FXStreet’s chart view put GBP/USD near 1.3362, still capped below the cluster of 50, 100, and 200 simple moving averages around 1.3413.

Initial resistance sits near that 1.3413 moving-average area. The next barrier is the descending trend resistance around 1.3522. On the downside, the key support line starts near 1.3159.

XOOMAR analysis: That setup says momentum has improved, but the rally has not yet broken the structure that kept the pair under pressure. Bulls need a move through the moving-average cluster to turn a Dollar-driven bounce into a cleaner technical breakout.

The practical watch item now is whether incoming Fed commentary and future US labor data confirm the June payrolls warning. If officials push back against the market’s softer rate path, or if the next data rebound, GBP/USD could lose altitude quickly. If the labor slowdown looks real, the Dollar’s rate premium stays under pressure, and Sterling gets more room to test resistance.

Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.

The Bottom Line

• Weak US jobs data reduced expectations for further Federal Reserve tightening, pressuring the US Dollar.
• GBP/USD rose to 1.3359, its strongest level in ten days, as rate support shifted away from the Dollar.
• Downward payroll revisions suggest the US labor market may be losing momentum faster than traders expected.