Pound Sterling Struggles Below 1.3500 Despite Weak US Jobs Data

The British Pound (GBP) started the week on the back foot, slipping under the 1.3500 level against the US Dollar (USD) in early Asian trading. While Friday’s disappointing US jobs report initially boosted GBP/USD, the pair has failed to hold momentum as fresh USD strength emerges.

Why the Dollar is Rebounding

The US Dollar gained modest traction after last week’s sharp fall, helped in part by weakness in the Japanese Yen due to political turmoil in Japan. However, analysts warn that this rebound may not last long, as markets are heavily pricing in Fed rate cuts.

• US Nonfarm Payrolls (NFP) showed just 22,000 new jobs in August, far below the expected 75,000.
• Revisions revealed 13,000 jobs lost in June, marking the first monthly decline since 2020.
• This has fueled expectations that the Federal Reserve could cut rates more aggressively, possibly delivering three cuts by year-end.

According to the CME FedWatch Tool, traders now see a 92% chance of at least a 25 bps cut in September, keeping US bond yields under pressure and limiting sustained USD gains.

Pound Sterling Faces Its Own Challenges

Despite support from sticky inflation that keeps the Bank of England cautious on rate cuts, the Pound remains weighed down by fiscal uncertainty. With the UK’s Autumn Budget due in November, concerns about high borrowing and slower growth are making investors hesitant to place aggressive bullish bets on Sterling.

Technical Picture for GBP/USD

• The pair remains below 1.3500, with immediate resistance around 1.3555 (last week’s high).
• Support lies near 1.3330–1.3300, while a recovery above 1.3460 could open the path toward 1.3500 and beyond.
• Until fresh catalysts arrive, GBP/USD is likely to trade cautiously within this range.

📊 In short, while weak US data should favor GBP/USD, political and fiscal risks in the UK are keeping the pair from capitalizing fully. Traders will now watch US ISM Services PMI and upcoming labor data for the next big move.

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