Pound Sterling Recovers Modestly Against US Dollar Following Mixed UK Jobs Report

Pound Sterling managed to regain some ground against the US Dollar during Thursday’s European trading session after the UK released a mixed batch of employment data. The GBP/USD pair rebounded slightly, trading near 1.3400 after slipping to an almost two-month low of 1.3370 earlier in the session.

Despite weak labor market signals, the modest recovery in the Pound Sterling comes as market participants digest both domestic data and shifting global sentiment, particularly regarding U.S. monetary policy and trade-related inflation concerns.

UK Employment Figures Offer Mixed Signals

The latest report from the UK’s Office for National Statistics (ONS) indicated that employment rose more than expected, with 134,000 new jobs added during the three months ending in May, up from the previous reading of 89,000. However, this positive news was offset by a rise in the ILO Unemployment Rate to 4.7%, surpassing both market forecasts and the prior figure of 4.6%.

Additionally, average earnings (with and without bonuses) increased by 5% year-over-year—slightly slower than previous readings but largely in line with expectations. This moderation in wage growth may offer a bit of relief to Bank of England (BoE) policymakers, who are currently under pressure following Wednesday’s hotter-than-anticipated inflation report. UK CPI rose at an annual rate of 3.6%, with core inflation reaching 3.7%.

Concerns about rising business costs have been building, especially after recent increases in employer contributions to social security. A recent survey by the Recruitment and Employment Confederation and KPMG also pointed to a growing supply of available workers, suggesting a cooling job market.

US Dollar Strengthens Amid Fed Speculation and Tariff-Driven Inflation

While the Pound Sterling struggled, the US Dollar strengthened broadly. The US Dollar Index (DXY) climbed 0.5% to 98.80 as investors digested political news and central bank commentary. President Donald Trump denied reports that he plans to remove Federal Reserve Chair Jerome Powell but reiterated his dissatisfaction with the Fed’s rate stance.

In an interview, Trump acknowledged that firing Powell could shake market confidence but implied that a resignation would be preferable. This followed reports that Trump informally consulted Republican lawmakers about Powell’s dismissal, leading to sharp reactions in both equity and currency markets.

Fed officials, including John Williams of the New York Fed and Raphael Bostic of the Atlanta Fed, expressed concern about consumer inflation expectations becoming unanchored. They noted that tariffs are starting to exert upward pressure on inflation, with Williams estimating a potential one-percentage-point increase in inflation extending into 2026.

Market attention now shifts to the upcoming U.S. Retail Sales data for June, scheduled for release at 12:30 GMT. Analysts expect a slight recovery of 0.1%, following a 0.9% decline in May—a key metric for assessing consumer spending and economic resilience.

Technical Outlook: Pound Sterling Remains Under Pressure

From a technical standpoint, Pound Sterling continues to face downside risks against the US Dollar. The GBP/USD pair is trading below both its 20-day and 50-day Exponential Moving Averages (EMAs), currently positioned at 1.3525 and 1.3470 respectively, confirming a bearish bias.

The 14-day Relative Strength Index (RSI) is also under 40.00, indicating strong bearish momentum. Key support is seen at the May 12 low of 1.3140, while resistance lies near the July 11 high around 1.3585.

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