GBP/USD Clings to 1.3750 as Traders Eye US Jobs Data and Fiscal Turmoil

The British Pound remains steady against the US Dollar, hovering around 1.3745 during the early hours of Wednesday’s Asian session. Despite recent volatility in global markets, GBP/USD continues to tread water as investors digest dovish signals from the Federal Reserve and await crucial US labor market data.

Fed Rate Cut Hopes Resurface After Powell’s Comments

Federal Reserve Chair Jerome Powell fueled speculation of a potential interest rate cut during his latest speech, suggesting that easing could arrive as early as July—if economic data supports the move. His cautious tone, coupled with the CME FedWatch Tool showing a rise in rate cut bets to nearly 25%, has added pressure to the US Dollar. The upcoming ADP Employment Change report for June will be pivotal in shaping near-term expectations.

Trump’s $3.3 Trillion Fiscal Package Raises Market Concerns

US fiscal policy remains in the spotlight as President Trump’s controversial tax-and-spending legislation makes its way back to the House for final approval. The bill, expected to balloon the national debt by $3.3 trillion, has stirred market anxiety and may further weigh on USD sentiment if passed without significant amendments.

Pound Finds Support Despite BoE’s Dovish Stance

On the UK side, Bank of England Governor Andrew Bailey recently acknowledged early signs of a softening labor market and signaled a continued easing cycle. Markets are now pricing in three rate cuts by year-end 2025, potentially lowering interest rates to 3.5%. These moves are seen as necessary to combat stagnant growth and persistent economic headwinds.

Technical Outlook: GBP/USD Stable for Now

The pair remains confined near 1.3745, with investors staying cautious ahead of Wednesday’s US data dump. A break above 1.3800 could open the door for further gains, while downside risk looms if labor data surprises to the upside and boosts USD demand.

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