- GBP/USD remains near its recent high as the dollar doesn’t seem to be in sync.
- US ADP jobs data showed a sharper decline than anticipated on Wednesday, dampening investor confidence.
- The forthcoming NFP report on Friday is gaining significance for the market, particularly regarding tariffs.
On Wednesday, GBP/USD received support, recovering from losses experienced the previous day and keeping prices elevated. It’s firmly above the 1.3500 mark, especially with the key US non-farm payroll data coming up later this week. The trend of the US dollar continues to take center stage, while the UK’s economic indicators seem quieter, with UK employment data set for next week.
The ADP jobs report showed an increase of just 37K jobs in May, which was significantly lower than the expected 115K boost. ADP figures have often been inconsistent and don’t reliably forecast the non-farm payroll numbers that usually follow. The upcoming NFP announcement is particularly crucial as concerns grow about the labor sector in the US economy. Amidst various uncertainties linked to trade policies from the White House, many businesses are still choosing to expand their workforce and investment plans.
Additionally, the ISM Service Purchase Manager Index (PMI) reported a further dip in investor sentiment on Wednesday, highlighting a rising pessimism in the service sector’s outlook, with a notable contraction reading of 49.9—the lowest in 11 months.
Trade negotiations linger as key employment reports approach
Wednesday marked the deadline for the Trump administration to offer trade proposals to its partners. Countries were anticipated to submit offers related to the tariff deal revealed in April, which has been put on hold for 90 days. However, the administration has remained rather quiet, suggesting fewer responses than earlier suggested by Trump officials.
Following a cautious Wednesday, Thursday appears to have a sparse economic calendar, but Federal Reserve officials are expected to feature in upcoming US market activities. Most in the market are closely watching trade developments and are awaiting the NFP report on Friday, which will include data on employment growth and average hourly wages for May.
GBP/USD price prediction
GBP/USD has gained some technical support at the 1.3500 level, helping to bolster bids through Wednesday’s session. While the bullish sentiment is somewhat stretched, there are signs of weakness on the short side as the pair persists well above its main long-term moving average.
GBP/USD Daily Chart
Pound Sterling FAQ
Pound Sterling (GBP), the oldest currency still in use, was established in 886 AD and is the official currency of Britain. In 2022, it ranked as the fourth most traded currency globally, making up 12% of the total with a daily average of about $630 billion. Its main trading pair is GBP/USD, known as “cable,” which represents 11% of the forex market.
The value of GBP is primarily driven by monetary policy decisions from the Bank of England (BOE), focusing on achieving price stability, which is targeted at a 2% inflation rate. Interest rate adjustments are the main tool for attaining this goal. A rise in rates can attract global investment, while lower rates may be employed to stimulate economic growth when inflation is too low.
Economic indicators like GDP, manufacturing, service PMIs, and employment statistics can all impact GBP’s value. A robust economy tends to attract foreign investment, potentially leading to elevated interest rates, thereby boosting GBP. Conversely, weak economic indicators can lead to depreciation.
Another significant factor for Pound Sterling is the trade balance, which measures the difference between exports and imports. A country that has strong export performance will likely see its currency strengthen due to increased demand from foreign buyers seeking these goods.
