Pound Bounces From Weekly Lows as US Adds 177K Jobs, GBP/USD Eyes Breakout
The British pound (GBP) is bouncing back after a 4 day slide, trading around $1.3285 as traders digest the strong US labour data.
Quick overview
- The British pound is recovering after a four-day decline, trading at approximately $1.3285 as traders react to strong US labor data.
- The US added 177,000 jobs in April, surpassing expectations, but the dollar struggles due to easing trade tensions and potential dovish moves from the Federal Reserve.
- UK manufacturing continues to decline, with the S&P Global PMI contracting for the seventh consecutive month, prompting expectations of a 25 bps rate cut from the Bank of England.
- GBP/USD is currently positioned between key technical levels, with potential bullish and bearish scenarios outlined for traders.
The British pound (GBP) is bouncing back after a 4 day slide, trading around $1.3285 as traders digest the strong US labour data. The US added 177,000 jobs in April, above expectations of 130,000 but below March’s revised 185,000. Despite the good numbers the US dollar (USD) is struggling to gain traction.
The unemployment rate was steady at 4.2% and average hourly earnings rose 3.8% year over year. Normally this would support the dollar but broader sentiment is being swayed by easing China-US trade tensions and pressure on the Federal Reserve to be dovish. President Trump via Truth Social reiterated his call for rate cuts – as the market is speculating the Fed could act before the July meeting.
Adding to the mix US factory orders rose 4.3% in March – domestic demand is still strong. But a rate move is still uncertain with growth signals improving and political noise.
UK Manufacturing Slumps, BoE Rate Cut Expected
On the UK side the S&P Global manufacturing PMI contracted for the 7th month in a row in April – industrial activity is still weak. Tariffs and slowing global trade are feeding through and the UK is exposed.
With inflation moderating and the economy cooling swap markets are pricing in a 25 bps rate cut from the Bank of England (BoE) next week. The widening interest rate differential between the Fed and the BoE could put pressure on the pound if US policy stays higher for longer.
Key points:
S&P UK Manufacturing PMI shrinks for 7th month
BoE to cut 25 bps next week
UK data shows tariff strain and weak demand
GBP/USD Levels to Watch
Technically GBP/USD is between the 50 period EMA ($1.3311) and trendline support at $1.3261. Momentum is flat but a breakout is near.
Bullish scenario: Buy above $1.3312 for targets at $1.3348 and $1.3401
Bearish scenario: Sell below $1.3260 for $1.3230 and $1.3202
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