**GBP/USD Slips as Weak US Payroll Revision Keeps Fed Cut Bets Intact**
*Original reporting by Anil Panchal, FXStreet*
The GBP/USD currency pair started the week under pressure, pulling back from its recent three-week highs. A disappointing US payroll revision, softening US Dollar, and shifting market expectations for the Federal Reserve’s interest rate trajectory played pivotal roles in price action. Here, we dive deep into the factors driving GBP/USD movement, examining fundamental drivers, technical outlooks, and key events that could impact both the Pound Sterling and the US Dollar in the days ahead.
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### Key Highlights
– GBP/USD retreats after hitting a multi-week high above 1.2800
– US Nonfarm Payrolls (NFP) for June were revised downward, impacting sentiment on the US Dollar
– Market expectations for a Fed rate cut in September remain strong
– UK macroeconomic data, domestic political changes, and Bank of England rhetoric keep the Pound volatile
– Technical chart signals suggest a complicated path forward for GBP/USD
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### USD Weakness Triggers Sterling Rally, Followed by Pullback
The US Dollar softened at the beginning of the week, triggered largely by lackluster macroeconomic data and growing anticipation of looser monetary policy from the Federal Reserve. The June Nonfarm Payrolls report was disappointing, but the subsequent downward revisions to prior months’ data sent further signals of cooling in the US labor market. The impact on the Dollar Index (DXY) was immediate, while GBP/USD briefly rallied before facing stiff resistance.
#### Market Reactions to US Data
– **US June NFP** posted at 206,000, a decent headline figure but less impressive upon closer inspection
– Sharp downward revisions to April and May payrolls – a combined reduction of 111,000 jobs – cast doubt on recent labor market strength
– The US unemployment rate rose to 4.1 percent, the highest in over two years
– Wage growth moderated, with average hourly earnings increasing by just 0.3 percent month-on-month
This string of data triggered a fresh wave of speculation that the Federal Reserve may be forced to ease monetary policy sooner rather than later. As a result, market participants amped up their bets on a rate cut for September, placing downward pressure on US Dollar yields.
#### Fed Rate Cut Odds and Treasury Yields
– The CME FedWatch tool indicated over 70 percent probability of a September rate cut
– US Treasury yields slipped; the benchmark 10-year yield dropped below 4.3 percent
– Softer yields underpinned risk-sensitive assets, including the Pound and other FX majors
As Dollar weakness set the early tone, GBP/USD was able to recover from a pullback and venture above the 1.2800 level. Still, the pair failed to sustain momentum as traders booked profits and awaited the next round of drivers.
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### UK Fundamentals: Political Transition, Growth Prospects, and BOE
On the UK side, the fundamental landscape is complicated by a mix of domestic and external elements.
#### Labour Party Election Win
– Last week, the UK held its closely watched general election
– The Labour Party won a strong majority, installing Keir Starmer as the new Prime Minister
– The rapid transition of power and centrist policy stance from Labour have reassured markets about political stability
– Focus swiftly shifted from electoral uncertainty to economic recovery and fiscal policy
#### UK Economic Outlook
– The UK economy, having emerged from a shallow recession, is showing tentative signs of improvement
– Surveys such as the S&P Global/CIPS Purchasing Managers’ Index (PMI) for Services and Manufacturing have rebounded above the key 50.0 threshold
– British Retail Consortium (BRC) and consumer spending data remain sluggish but stable
– Inflation, previously a major concern, has cooled but remains above the Bank of England’s 2 percent target
#### Bank of England Policy
– The
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