– Written by
Minesh Chaudhari
STORY LINK British Pound to Dollar Forecast: Weak Payrolls Ease Pressure on GBP/USD
The Pound to Dollar (GBP/USD) exchange rate came under heavy pressure on Thursday, falling to fresh three-month lows below 1.3200 before stabilising as investors reacted to extreme moves in global bond markets.
GBP/USD touched around 1.3193, its lowest level since June, before recovering modestly.
The 2026 low remains around 1.3140.
Risk appetite deteriorated sharply as bond yields surged across major markets, boosting demand for the Dollar and limiting support for Sterling.
ING had commented; “Expect DXY to remain bid in a 101.50-101.80 range today, but an upside breakout is a possibility should tomorrow’s US data surprise on the upside or should the sell-off in European government debt start to heavily weigh on the euro.”
According to UoB; “GBP has likely entered a range-trading phase, expected to be between 1.3205 and 1.3345.”
Weak US Jobs Data Eases Bond-Market Pressure
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The bond-market rout intensified on Thursday, with the US 10-year Treasury yield climbing above 5.3% and the UK 30-year gilt yield breaking above 6% for the first time since 1998.
The surge in borrowing costs triggered losses across global equity markets and intensified concerns over fiscal sustainability.
AJ Bell investment director Russ Mould commented; “Prime Minister Andy Burnham and Chancellor John Healey already have enough on their plate without a rapid increase in government borrowing costs since they took office. Gilt yields moving at such a pace presents a major challenge for their spending and borrowing plans.”
Friday’s US employment data, however, provided some relief.
Non-farm payrolls increased by just 29,000 in September, far below consensus forecasts of around 90,000.
The unemployment rate also edged higher to 4.2% from 4.1%, while previous payroll estimates were revised lower.
The weak report prompted a sharp retreat in Treasury yields and reduced expectations that the Federal Reserve will raise rates again in October.
Markets cut the implied probability of an October hike to around 20%, compared with close to 40% before the release and roughly 70% last week.
The US 10-year yield retreated towards 5.17% following the figures.
Softer Inflation and Jobs Data Challenge Fed Tightening Bets
The labour-market figures followed softer-than-expected US inflation data earlier in the week.
Core PCE prices increased 0.2% in August, while the annual rate held at 3.0%.
The data had already encouraged traders to reduce expectations of a back-to-back Federal Reserve rate hike.
National Australia Bank head of FX strategy Ray Attrill commented; “There’s a little bit of comfort to be drawn from the (US PCE) numbers. I think the market’s been right to moderate somewhat its expectations for a back-to-back Fed hike, but I don’t think it necessarily means there aren’t still more Fed hikes ahead.”
The latest payroll figures have strengthened the argument for the Fed to pause in October, although inflation remains above target and policymakers may still consider another increase later in the year.
Attrill had also noted that the Dollar was becoming more sensitive to developments in longer-dated Treasury yields than to immediate policy pricing.
That relationship was evident again on Friday as lower yields triggered a modest Dollar retreat.
For the GBP/USD exchange rate, the 1.3190-1.3200 area remains the immediate downside support zone.
A sustained break below this region would expose the June low around 1.3140.
On the upside, Pound Sterling would need to recover above 1.3250 and then 1.3300 to ease the immediate bearish pressure.
The softer US jobs report has provided some breathing room, but the broader Dollar trend remains supported by high yields, elevated geopolitical risk and continued concerns over global fiscal policy.
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TAGS: Pound Dollar Forecasts
