The GBP/USD pair is trading with slight gains near 1.2725 despite a stronger US Dollar on Monday. This comes after the US economy added more jobs than expected in May, reducing the likelihood of Fed rate cuts in September. The upbeat US employment report has dampened expectations for rate cuts, putting pressure on the Greenback.
Investors are keeping an eye on UK employment data for May, set to be released on Tuesday. Meanwhile, the US will be focusing on the Consumer Price Index (CPI) and the Federal Reserve’s interest rate decision this week.
In May, US Nonfarm Payrolls increased by 272,000, surpassing market expectations of 185,000. The Unemployment Rate rose slightly to 4.0% while Average Hourly Earnings also saw a rise to 4.1% year-over-year.
The strong US employment data has led to a decrease in rate cut expectations by the Fed. Futures traders are now predicting minimal chances of a rate cut before September, which could support the US Dollar in the near term.
On the other hand, the UK’s Employment data will play a crucial role in shaping market expectations. Any negative data, such as increased layoffs, could lead to early rate cuts by the Bank of England and weaken the Pound Sterling.