**GBP/USD Price Forecast: Pound Struggles Near 1.3150 as US Jobs Collapse**
*By Jake Simmons, TradingNews.com*
The GBP/USD currency pair encountered renewed volatility recently, with the British Pound struggling to gain traction above the 1.3150 level against the US Dollar. Volatility escalated after a weaker-than-expected nonfarm payroll (NFP) print out of the United States, sending ripples through the foreign exchange landscape and highlighting persistent doubts over the relative health and direction of both UK and US economies.
### US Jobs Report Triggers Market Jitters
The latest US nonfarm payrolls report released on Friday shocked market participants with a much sharper-than-expected decline in job creation. According to the US Bureau of Labor Statistics, the economy added just 67,000 jobs in the previous month, far beneath the consensus forecast of 190,000. This pronounced miss signaled a potential slowdown in hiring, raising immediate concerns about the underlying strength of the US labor market.
Key details from the June US Employment Report:
– **Nonfarm Payrolls:** 67,000 vs. consensus 190,000
– **Unemployment Rate:** 4.2 percent vs. prior 4.1 percent
– **Average Hourly Earnings:** Increased by 0.2 percent month-on-month
Market reactions were swift. The US Dollar Index (DXY) tumbled to fresh monthly lows as traders began to price out aggressive Federal Reserve rate hikes for the second half of 2024. Bond yields declined across the curve, with the US 10-year Treasury yield dropping to 3.85 percent amid flight-to-quality trades and expectations of a dovish tilt in upcoming FOMC meetings.
### Pound Advances Briefly Before Stalling
In the immediate aftermath of the jobs report, GBP/USD surged, jumping from the 1.3080 region to as high as 1.3150 as Dollar weakness swept across G10 currencies. The Pound, however, failed to consolidate its gains as initial bullish momentum faded throughout the US session. Selling pressure emerged near 1.3150, which coincided with a cluster of technical resistance levels.
**Underlying Factors Behind GBP/USD Stalling:**
– Appetite for risk faded quickly as attention turned to broader macroeconomic uncertainty, overshadowing the weak dollar narrative
– Whispers of sustained economic challenges in the UK prevented full bullish extension
– Traders appeared reluctant to commit to further upside in the Pound with UK growth figures and Bank of England guidance looming later this month
The inability of GBP/USD to hold above 1.3150 was interpreted by some as a signal of fragile buyer conviction and increased sensitivity to fundamental releases on both sides of the Atlantic.
### UK Economic Worries Cloud Sterling’s Outlook
Despite the Pound’s initial reaction to Dollar softness, forward-looking indicators for the British economy continue to present a mixed picture. Growth remains modest, with the UK’s GDP expanding by only 0.1 percent quarter-on-quarter in the first three months of 2024. Inflation has fallen more persistently than anticipated but is still elevated relative to target levels, raising questions about the Bank of England’s future monetary stance.
Several concerns currently weigh on Sterling:
– **Sluggish consumer confidence:** Sentiment among British households and businesses remains tepid as real wage growth stagnates and the effects of past rate hikes are still filtering through the economy.
– **Political uncertainty:** Concerns regarding government fiscal policy and Brexit-related trade negotiations remain unresolved, discouraging sustained investment flows.
– **Divergence in central bank outlooks:** Although markets doubt the Bank of England will hike rates again soon, uncertainty lingers regarding the precise timing and magnitude of any future policy moves.
**Economic Data Highlights for the UK This Month:**
– **Monthly GDP:** Investors expect growth to remain flat or slightly positive, underscoring the fragility of the recovery.
– **CPI inflation:** Latest data suggests annual CPI inflation remains
Read more on GBP/USD trading.