Sterling and Euro Slip on Strong U.S. Jobs Report
Sterling and the euro fell on Friday as a stronger-than-expected U.S. payroll report reinforced expectations that the Federal Reserve will maintain higher interest rates for longer. This boosted dollar demand across global currency markets.
Currency Pair Movements
As of 08:55 ET (12:55 GMT), GBP/USD traded down 0.11% at 1.3413, while EUR/USD declined 0.14% to 1.1594. Both pairs were pressured by renewed dollar strength following another resilient reading from the U.S. labor market.
U.S. Nonfarm Payrolls Signal Strong Hiring
The dollar received additional support after May nonfarm payrolls rose by 172,000, nearly double market expectations of 85,000. April payrolls were also revised upward to 179,000 from 115,000, indicating that hiring momentum remains robust.
The unemployment rate held steady at 4.3%, and the labor force participation rate remained at 61.8%, suggesting that labor market conditions are broadly stable despite concerns about potential slower economic growth later this year.
Wage Growth Eases Inflation Concerns
Average hourly earnings increased 0.3% month-on-month in May, up from 0.2% in April, while annual wage growth eased to 3.4% from 3.6%. Although wage gains remain solid, strong hiring and stable unemployment are unlikely to materially change the Fed’s hawkish monetary policy stance.
Geopolitical and Oil Market Influence
Geopolitical developments, including U.S.-Iran tensions, continue to influence cautious market sentiment. Oil prices have remained relatively subdued compared with prior periods of heightened Middle East risk. Analysts note that the lack of a major oil rally has limited additional dollar gains despite a supportive macroeconomic backdrop.
Technical Outlook for EUR/USD and GBP/USD
EUR/USD remains near the lower end of its recent 1.1600–1.1650 trading range, with 1.1600 acting as a key support level. Stronger U.S. economic data and widening rate differentials leave downside risks skewed.
For sterling, signs of slowing UK economic activity have tempered expectations for Bank of England tightening, while stronger U.S. data widen the policy gap between the Fed and BoE. As a result, GBP remains vulnerable to further losses if the dollar continues to strengthen.
Weekly Performance and Outlook
On a weekly basis, sterling is set to post a modest loss against the dollar, as resilient U.S. economic data and expectations of higher-for-longer Fed rates outweigh domestic UK factors, maintaining support for the greenback.
