GBP/USD Rises on Weak U.S. Jobs Data

The GBP/USD pair reclaimed ground above 1.35 after U.S. labor market numbers showed only 22,000 new jobs in August, far below expectations of 75,000. The unemployment rate rose to 4.3%, its highest since 2021, while wage growth held at 0.3% month-on-month. Treasury yields fell sharply, the dollar weakened, and traders shifted almost fully toward pricing in a Federal Reserve rate cut on September 17. Some are now betting on as many as three cuts before year-end, contingent on softer inflation data. The CPI release on September 11 and PPI a day earlier will be pivotal, alongside UoM sentiment on September 12, as they set the backdrop for the Fed’s decision.

UK Data Provides Sterling with Tailwind

Recent UK figures gave the pound resilience. July retail sales rose 0.6% month-on-month, beating forecasts of 0.3%. Net lending to individuals jumped £6.1 billion compared with £4.9 billion expected, while final services PMI hit 54.2, above the preliminary 53.6. These numbers reinforced the case for a consumer-driven rebound, though traders remain cautious amid fiscal uncertainty. Political reshuffling under Prime Minister Starmer and questions over fiscal discipline continue to hang over sentiment, with Deputy PM Raynor’s resignation raising expectations of Treasury changes.

Technical Outlook for GBP/USD Levels

The GBP/USD chart shows a bullish structure, with price advancing to 1.3506 and reclaiming both the 50-day SMA at 1.3446 and the 200-day SMA at 1.3464. Resistance is clustered between 1.3540 and 1.3588, followed by a major test at 1.3595–1.3600. A breakout above these thresholds could open the door to 1.3660. Support sits in the 1.3435–1.3460 zone, with a failure there exposing 1.3417 and possibly 1.3300. Momentum indicators, however, are flashing caution. RSI is at 64.9, approaching overbought territory, while candlesticks near 1.3550 show long upper wicks, a potential reversal sign. A bearish divergence is forming between price and RSI, suggesting risks of a pullback.

Macro Catalysts That Could Drive GBP/USD

The pound’s near-term path will depend on U.S. macro data. September’s CPI is expected at 0.3% month-on-month and 2.9% year-on-year. If inflation undershoots, Fed cuts are likely to accelerate, lifting GBP/USD toward 1.36 and beyond. Conversely, stronger prints would re-energize the dollar, pressuring the pair back toward 1.34. Political risk in the UK also cannot be ignored. Analysts at Capital Economics warned that fiscal missteps could trigger bond market stress, noting that historical fiscal crises in Britain often came from changes in perceptions or leadership rather than immediate data.

Positioning and Market Sentiment

CFTC data shows speculative net short positions on GBP widened slightly to –33,100 from –31,400 the prior week, indicating traders still doubt the sustainability of sterling gains. Yet the pair’s ability to close above 1.35 despite negative positioning highlights demand from real money accounts and hedging flows. Options markets are also pricing higher implied volatility into September, reflecting the binary risk of Fed cuts and UK fiscal headlines.

Verdict on GBP/USD

The balance of risks favors further upside in GBP/USD if U.S. inflation data supports the Fed’s dovish tilt. A sustained daily close above 1.3545 would strengthen the bullish case, while a rejection at resistance paired with strong U.S. data could quickly drag the pair back toward 1.3417. At 1.3506, the setup argues for a short-term buy bias with tight stops, but traders must be ready for sharp swings around U.S. data and UK political announcements.

That’s TradingNEWS

USD/JPY Struggles Near 147 as U.S. Labor Market Weakens

The USD/JPY pair closed the week at 147.34 after swinging between 146.78 and 149.13. Softer U.S. labor market data pushed the dollar lower on Friday, with nonfarm payrolls and unemployment revisions reinforcing bets on Federal Reserve rate cuts. A break under 146.81 briefly pressured the pair, though buyers defended support into the close. The pair now sits above the 50-day EMA but capped below the 200-day EMA, leaving traders watching whether the next move is toward the 145.00 handle or back to 150.00.

Japanese GDP and Producer Prices Set Tone for Yen Strength

Finalized second-quarter GDP showed 0.3% quarter-on-quarter growth, helped by a 0.8% rebound in external demand despite U.S. tariffs. Private consumption rose 0.2%, signaling steady domestic momentum. Japan’s record minimum wage hike of 6.3% to ¥1,121 boosts inflation expectations, intensifying speculation that the Bank of Japan may tighten policy as early as October. Producer price data due September 11 is forecast at 2.7% year-on-year, up from July’s 2.6%. A stronger print could cement expectations of a rate hike and drive USD/JPY closer to 145.

Fed Policy Outlook Hinges on CPI and Jobless Claims

Markets are pricing in a 99% chance of a 25-basis-point cut in September, with U.S. inflation projected at 2.9% for August versus 2.7% in July. Initial jobless claims are expected to tick up to 240k from 237k, signaling labor market cooling. Softer CPI and higher claims could accelerate rate cut expectations, weakening the dollar. In contrast, hotter inflation data could ease selling pressure and hold USD/JPY above 147.

Trade and Tariff Developments Add New Volatility Layer

President Trump’s tariff cut on Japanese autos from 27.5% to 15% gave yen traders another factor to weigh. Auto exports had fallen 27% year-on-year in July, raising recession fears. The tariff reduction should support exports and improve Japan’s trade terms, but if U.S. consumption weakens, the benefit may be limited. The policy shift nevertheless adds a bullish undertone for the yen as trade tensions ease slightly.

Technical Levels Define Risk Zones for USD/JPY

Immediate resistance for USD/JPY sits at the 200-day EMA near 149.35, with a breakout exposing the August high at 150.91. On the downside, support rests at 146.21, followed by the psychological 145.00 level. RSI momentum has flattened, suggesting indecision as markets await fresh catalysts. A decisive daily close below 146.20 could invite stronger yen buying, while holding above 147.50 would encourage a retest of 150.

That’s TradingNEWS

EUR/USD Tests 1.17 as Fed Cuts Loom and ECB Holds Steady

The euro-dollar pair (EUR/USD) finished the week at 1.1717, up from earlier lows after U.S. labor market data came in far weaker than forecast. Nonfarm payrolls in August added only 22,000 jobs versus 75,000 expected, while June revisions showed a 13,000 contraction, the first negative print in four years. The unemployment rate climbed to 4.3%, matching the highest level since late 2021, and manufacturing jobs are down 78,000 year-to-date. These signals have markets fully pricing a 25-basis point Fed cut on September 17, with traders debating whether the move could be as aggressive as 50 points.

Technical Landscape: Symmetrical Triangle and Key Levels

EUR/USD has been locked in a tightening range with higher lows and lower highs forming a symmetrical triangle. Support holds at 1.1663 (50-day SMA), while the resistance cluster sits at 1.1741–1.1788. A daily close above 1.1741 would confirm a bullish breakout, opening a path toward 1.1828–1.1850, levels aligned with major liquidity pools. Failure to clear those barriers risks sending the pair back toward 1.1613 and possibly 1.1573. For now, Friday’s high near 1.1760 reflects that bulls are testing conviction, but the candles reveal indecision with dojis and mixed closes. RSI at 55.8 signals mild bullish momentum without tipping into overbought territory, leaving scope for continuation if buyers step in at retracement levels.

Fed vs. ECB: Diverging Policy Paths Shape the Outlook

The Federal Reserve is under pressure to cut rates amid slowing job creation and cooling demand indicators. U.S. CPI data due September 11 is expected at 0.3% month-over-month and 2.9% annually, which could decide whether the Fed signals a series of cuts extending into October and December. By contrast, the European Central Bank is expected to hold rates steady at 2.0–2.15%, with President Lagarde signaling caution on inflation despite sluggish eurozone growth. Germany continues to underperform, France is battling fiscal pressures, and eurozone inflation readings remain slightly higher than expected, leaving the ECB constrained. The result is a widening divergence: the Fed leaning dovish while the ECB hesitates, a mix that structurally supports EUR/USD in the near term.

Market Sentiment: Positioning Around 1.1700

For much of August, 1.1700 served as an inflection point, repeatedly tested as both support and resistance. Traders view this level as pivotal: maintaining closes above 1.1710 builds confidence in sustained bullish pressure, while failure reopens the downside risk zone. Sentiment data suggests institutions are beginning to lean into a stronger euro, expecting that the Fed’s dovish tilt will weaken the dollar, though concerns over tariffs and inflation still temper enthusiasm.

Short-Term Trading Scenarios

If EUR/USD holds above 1.1710 and pushes through 1.1748, buyers may accelerate toward 1.1790–1.1828, the first true breakout zone since July’s highs near 1.1830. In contrast, rejection at resistance would likely see short-term profit-taking back to 1.1686, a 76.4% Fibonacci retracement that aligns with the prior swing structure. Breaching 1.1613 would be the real inflection for bears, potentially shifting the narrative from consolidation into outright reversal, with 1.1550–1.1500 as deeper downside liquidity targets.

Macro Catalysts This Week

The coming calendar is stacked with pivotal releases. On Sept. 10, U.S. PPI will give an early read on wholesale inflation pressures. On Sept. 11, the ECB announces policy, followed immediately by U.S. CPI, creating a potential double catalyst. On Sept. 12, the University of Michigan’s sentiment and inflation expectations survey will help assess household inflation psychology. In Europe, weak GDP prints from Germany and France continue to weigh on investor confidence. Meanwhile, political tensions and tariff risks remain a wildcard for both currencies, likely to add volatility around key technical levels.

Verdict: EUR/USD Bias Turns Bullish With Risks of Pullback

With Fed cuts now fully priced and the ECB reluctant to ease, the bias for EUR/USD leans bullish, targeting 1.1740–1.1780 in the near term, with a stretch goal of 1.1828–1.1850 if momentum holds. However, failure to defend 1.1700 would invite sharp pullbacks toward 1.1660–1.1610. Given the technical triangle structure, macro divergence, and dovish Fed bets, the outlook tilts in favor of euro strength, but traders must brace for volatility around U.S. inflation data. At current levels near 1.1717, EUR/USD is best rated as Buy on dips, with tactical entries favored above 1.1685 and protective stops below 1.1607.

That’s TradingNEWS

– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast: Scope for GBP to Retest Resistance Near 1.36

The Pound to Dollar exchange rate (GBP/USD) climbed back above 1.35 on Friday after another weak US payrolls report reinforced expectations of imminent Federal Reserve rate cuts.

With non-farm payrolls rising just 22,000 in August and unemployment ticking up to 4.3%, markets are betting heavily on September easing.

Currency analysts see scope for GBP/USD to retest resistance near 1.36, though UK fiscal uncertainty and political risks remain a drag on Sterling’s longer-term outlook.

GBP/USD Forecasts: Back Above 1.3500

The Pound to Dollar (GBP/USD) exchange rate edged higher ahead of Friday’s New York open and spiked higher to 1.3530 following the US jobs data.

The dollar was undermined by another weaker-than-expected US jobs data, as markets continue to anticipate significant Federal Reserve rate cuts, while US yields moved lower.

According to Scotiabank; “Regaining the recent peaks around 1.3545/50 would confer a little more strength on the technical outlook and put the pound on track to test major resistance at 1.3595/00.”

US non-farm payrolls increased 22,000 for August compared with consensus forecasts of around 75,000. There was a small upward revision to the July figure to 79,000 from the flash reading of 73,000, but there was another downward revision for June with the BLS reporting a 13,000 decline, the first negative reading since the beginning of 2021.

Manufacturing and government jobs both recorded declines on the month.

The labour-market survey recorded an increase in the unemployment rate to 4.3% from 4.2%, equalling the highest reading since late 2021. There was, however, a significant increase in the number of people employed with an increase in the labour force.

According to Scotiabank; “There is little doubt that the US jobs market is loosening as labour demand softens.”

It added; “How quickly this dynamic develops remains to be seen but Fed policymakers appear to be increasingly conscious of the emerging labour market slack as they mull the rate outlook.”

Markets are extremely confident that rates will be cut in September and are pricing in over a 65% chance that there will be three cuts by the end of 2025.

MUFG was wary over forecasting heavy dollar losses; “Based on the resilience of the dollar this week given global factors are helping curtail non-dollar buying, an NFP print closer to zero or negative will likely be needed in order to trigger a notable drop for the dollar.”

UK retail sales data had little impact while there were slight Pound losses after the resignation of Deputy Prime Minister Raynor.

There are reports that Prime Minister Starmer will engage in a wider cabinet reshuffle with traders waiting to see whether there are any changes in the Treasury, especially given market sensitivity to fiscal policy.

Capital Economics deputy chief UK economist Ruth Gregory noted that many of the conditions which have led to fiscal crises in the past are now in place in the UK, but that a fiscal crisis in the UK is neither imminent nor inevitable.

According to Gregory; “The missing ingredient is a trigger. If a UK fiscal crisis does erupt, it’s as likely to come from a change in perceptions or personnel as economic data or policy.”

She added; “This underlines the need for the government to continue to commit to fiscal discipline to keep the bond market onside.”

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