The GBP/USD currency pair extended its losses for the second consecutive day, declining by 0.12% to trade at 1.3205, following a strong US Nonfarm Payrolls (NFP) report that has reinforced expectations the Federal Reserve will maintain its current interest rate policy [1]. The US Bureau of Labour Statistics reported that the US economy added over 178,000 jobs in March, significantly surpassing forecasts of 60,000. However, February's job creation figure was revised downward to -133,000. The unemployment rate improved, falling to 4.3% from 4.4% [1].
The US Dollar Index (DXY) rose by 0.12%, moving back above the 100.00 mark, as speculation mounts that the Fed will keep rates steady amid ongoing Middle East conflict and persistent inflation concerns. US Treasury yields, particularly the 2-year, edged higher after the NFP release, reflecting a shift in investor sentiment towards a firmer US Dollar [1]. Data from the Chicago Board of Trade (CBOT) indicated that investors have reduced their dovish bets, now predicting the Fed will hold rates flat for the year [1].
Despite the strong jobs report, the US S&P Global Services PMI contracted in March for the first time since January 2023, dropping from 51.7 in February to 49.8. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that the US economy is struggling under rising prices and uncertainty, exacerbated by the Middle East conflict and recent policy decisions, including tariffs. Williamson highlighted the stagflationary environment—characterized by no growth and surging prices—as a significant challenge for policymakers, with the S&P survey revealing a slowdown in employment [1].
Technically, GBP/USD remains mildly bearish, trading below clustered Simple Moving Averages (SMAs) around 1.3550 and beneath a descending resistance trendline from 1.3869. The pair has moved away from previous higher supported closes along a rising trendline from 1.3035, shifting focus to defending recent lows. Immediate resistance is at 1.3300, with further resistance at 1.3400 and 1.3500, while support lies at 1.3200 and 1.3100 [1]. The FXS Fed Sentiment Index continues to rise, underscoring a firmer US Dollar backdrop that keeps GBP/USD rallies vulnerable [1].
CONCLUSION
The strong US jobs report has reinforced expectations that the Federal Reserve will maintain its current interest rate policy, leading to a firmer US Dollar and continued pressure on GBP/USD. Market sentiment is mildly bearish for Sterling, with technical indicators suggesting further downside risk. Investors are now focused on defending recent lows in GBP/USD as the Fed's rate hold outlook prevails.