On Friday, in European trading, the British pound (GBP) is hovering close to its weekly low, resting around 1.3420 against the US dollar (USD). The GBP/USD pair faces pressure as the US dollar continues to gain strength ahead of the upcoming non-farm payrolls (NFP) data scheduled for 13:30 GMT.
As of now, the US Dollar Index (DXY), which measures the dollar’s performance against six major currencies, is up 0.17% at approximately 99.00, hitting a four-week peak.
Market participants are closely watching the upcoming US jobs report, which is expected to offer more insight into the Federal Reserve’s approach to monetary policy. The December NFP report holds additional significance as it comes after the longest government shutdown in history, which affected the previous month’s figures.
According to forecasts, the U.S. economy added 60,000 jobs in December, a slight dip from November’s 64,000. The unemployment rate has decreased to 4.5% from 4.6% previously. Although a softening job market could prompt the Fed to take a dovish stance, positive indicators may not fully ease policymakers’ concerns about labor market conditions.
Additionally, attention will be on average hourly wage growth for further insights into inflation trends. This crucial wage growth indicator is anticipated to rise more than in December, moving to 3.6% year-on-year, compared to 3.5% in the previous month. On a monthly basis, wage increases are expected to accelerate to 0.3%, up from 0.1% previously.
Daily Digest Market Movers: UK employment data drives BoE’s monetary policy expectations
- Sterling showed a mixed performance against major currencies during Friday’s European trading hours. The UK currency is poised to evolve with a wait-and-see attitude as focus shifts to labor market stats in the UK for the three months leading up to November.
- Investors are particularly keen on UK jobs data for hints regarding job market health. In 2025, the UK labor market displayed weakness, with businesses curtailing hiring in response to increased social security contributions. The unemployment rate reached 5.1% in the three months ending in October, marking the highest level since March 2021.
- The UK labor data will significantly influence market expectations surrounding the Bank of England’s (BoE) monetary policy. The BoE indicated in its December meeting that the monetary policy outlook remains on a “moderately downward trajectory.”
- A key driver for the GBP/USD pair this month will be the announcement regarding the successor to Fed Chairman Jerome Powell. President Trump has mentioned he will reveal the new Fed chair in early January.
- In a recent interview, President Trump indicated that he has made a decision regarding the next Federal Reserve president but has yet to discuss it with anyone. Although he didn’t confirm nominations in the interview, he left open the possibility of appointing economic adviser Kevin Hassett, along with names like former Fed Governor Kevin Warsh and current Fed governors Christopher Waller and Michelle Bowman as potential candidates for the position.
Technical Analysis: GBP/USD seeks to hold at 1.3400
Currently, GBP/USD is trading at 1.3416. The 20-day exponential moving average (EMA) is trending upwards but is facing resistance just below at 1.3439, suggesting limited recovery attempts in the near term.
The 14-day Relative Strength Index (RSI) is sitting at 50, indicating a neutral momentum after previous overbought conditions.
The 50% Fibonacci retracement level at 1.3402 acts as a crucial pivot following the failure to uphold the 61.8% Fibonacci retracement at 1.3494. A breach above this level could lead to resistance around the round figure of 1.3600.
On the flip side, if the price continues falling below the 20-day EMA, it may create a bearish outlook and open the door for further declines toward the 38.2% Fibonacci retracement level at 1.3309.
(The technical analysis in this story was created using AI tools.)
