The GBP/USD currency pair gathered notable momentum on Tuesday’s early European session, climbing to around 1.3560, the highest level since August 15.
Market participants are increasingly focused on the upcoming US Nonfarm Payrolls (NFP) Benchmark Revision, with expectations that it could have significant implications for the Federal Reserve’s (Fed) monetary policy and the direction of the US Dollar (USD). Nabotex Group specialist Ben Stevens outlines the essential details of the subject in this well-crafted article.
The Pound Sterling (GBP) is benefiting from weaker US labor market data, which has sidelined some of the US Dollar’s strength.
The recent NFP report, released last Friday, highlighted a slowing pace of hiring in August, while the US Unemployment Rate rose to its highest level since 2021, underscoring a softening in the world’s largest economy’s labor market. Such data strengthens the case for further Fed interest rate cuts, a dynamic that has supported GBP/USD gains.
Analysts are closely monitoring the NFP Benchmark Revision, which covers the period from April 2024 to March 2025. Preliminary forecasts suggest a potential downward adjustment of up to 800,000 jobs, a significant figure that could redefine market expectations around US monetary policy.
Should the revision confirm weaker-than-expected employment growth, it would signal that the Fed may be behind the curve in achieving maximum employment.
Traders are pricing in aggressive Fed action, with the CMEFedWatch tool indicating an 89.4% probability of a 25-basis point (bps) rate cut at the September meeting and a 10.6% chance of a jumbo 50 bps cut. This environment of heightened uncertainty around the USD has encouraged investors to seek exposure in GBP, particularly as the BoE’s monetary policy stance appears comparatively more stable.
The Bank of England (BoE) has signaled a potential delay in interest rate cuts, which could limit the GBP/USD upside despite the USD weakness. HSBC analysts now expect the BoE to maintain rates until April 2026, abandoning their prior forecast of quarterly rate reductions starting in August 2024.
Similarly, Deutsche Bank has pushed back its next rate cut forecast from November to December, reinforcing the view that GBP interest rates may remain higher for longer.
The combination of sluggish US employment data and the prospect of a delayed BoE rate cut is creating a supportive environment for GBP/USD, although market participants remain cautious.
Technical analysts note that the pair’s advance above 1.3550 represents a key psychological and technical level, with 1.3560 acting as immediate resistance. A sustained move above this level could open the door for further upside toward 1.3600, while failure to hold may see the pair retrace to the 1.3500 support zone.
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Market sentiment is also shaped by broader macro considerations. With the Fed under pressure to respond to slowing job creation, expectations of rate cuts are becoming increasingly priced in, influencing capital flows toward the GBP.
Conversely, the BoE’s cautious approach, highlighted by the recent revisions in HSBC and Deutsche Bank forecasts, has instilled a measure of stability in sterling, preventing overly aggressive GBP/USD rallies.
From a fundamental perspective, the NFP Benchmark Revision is likely to be a major driver of market volatility for USD pairs, particularly GBP/USD, in the short term. Analysts warn that any downward revision exceeding expectations could intensify speculation of a jumbo Fed rate cut, further weakening the USD.
Conversely, if the revisions surprise on the upside, the GBP/USD rally could face a temporary setback, as the Fed’s pace of policy easing might be reconsidered.
In the context of trading strategy, investors are advised to monitor key levels, such as 1.3500 as support and 1.3560–1.3600 as resistance, while staying attentive to US macro releases, particularly the NFP revisions and subsequent commentary from Fed officials. Volatility spikes around these events are common, creating both opportunities and risks for short-term traders and institutional investors alike.
In conclusion, the GBP/USD pair is showing strength, trading above 1.3550 amid a softening US labor market and delayed BoE rate cut expectations.
The upcoming US NFP Benchmark Revision will likely play a critical role in shaping market expectations for the Fed’s monetary policy and the USD’s trajectory in the weeks ahead. Traders are advised to keep a close eye on labor market data, as it will continue to drive sentiment and positioning in the foreign exchange market.
The interplay of macro data, central bank expectations, and technical levels will continue to define GBP/USD price action, making the NFP Benchmark Revision one of the most closely watched events this week.
