GBP managed to gain despite UK labour market data showing further signs of softening. Unemployment ticked up to 4.7%, wage growth slowed, and overall the report added weight to expectations of a rate cut from the BoE in August. The uptick in GBP was mostly driven by improved risk sentiment in the market.
US June retail sales surprised to the upside, helping the USD extend gains into the afternoon session. Jobless claims also came in below expectations, supporting a more hawkish Fed outlook.
*Daily move - against G10 rates at 7:00 am, 18.07.25
** Indicative rates - interbank rates at 7:00 am, 18.07.25
Following a positive afternoon session for USD, in the evening the gains were given up after Fed member Waller called for the Fed to cut interest rates this month, citing that the job market is “on the edge” whilst upside risks to inflation are limited. USD remains weak to start the day – seeing GBPUSD and EURUSD bouncing off of key support levels.
The labour market print from the UK gave more signs of softness in the economy — unemployment rising, wage growth slowing, and net job losses all adding fuel to the fire for an August rate cut. Markets are now assigning roughly a 70% probability to a rate cut. Despite that, GBP has held technical support well versus both USD and EUR — but remains vulnerable on any further BoE dovishness and negative data points.
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