USD picks up better job numbers

Yesterday's currency recap

USD gained in the afternoon after jobless claims fell more than expected, slightly dampening expectations for Fed rate cuts. In response, markets scaled back expectations for a mid‑year move, yet still largely factor in two rate cuts before year‑end.

EUR/USD slid to its lowest since early December, while GBP underperformed despite stronger UK GDP. AUD outperformed within G10, seeing GBPAUD test the October/November lows once again.

Today's GBP rates

What we think

GBP’s muted performance yesterday, despite a run of broadly stronger UK data, indicates the move was driven less by domestic fundamentals and more by external flows, particularly in the context of wider USD strength. Near term, GBP may stabilise or retrace lower with focus now shifting to next week's job and inflation numbers, which will be key for BoE rate-cut timing; risks still skew toward a softer print, keeping downside pressure on GBP pairs. As mentioned yesterday, should the prospect of a rate cut be bought forward, then that would suggest near term GBP losses.

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