The GBP/USD pair edged lower on Thursday, pressured by caution in the markets ahead of the highly anticipated U.S. Non-Farm Payrolls (NFP) report. Investors are dialing back risk exposure as they await fresh clues on the Federal Reserve’s next moves, with the pair trading near its lowest level in a week. Weakness in the pound was compounded by concerns over the UK’s sluggish economic recovery.
Market participants remain focused on the U.S. labor market data, which has been a critical factor in shaping expectations around Fed policy. A stronger-than-expected jobs number could bolster the case for additional rate hikes, driving the U.S. dollar higher and pressuring the GBP/USD further. Conversely, a disappointing report could provide some relief for the pair, albeit temporarily, as the Bank of England’s cautious stance continues to weigh on the pound.
Broader risk sentiment has also soured, with equity markets and commodities under pressure as global growth concerns resurface. The pound remains vulnerable to external risks, given the UK’s exposure to energy price volatility and ongoing Brexit-related trade challenges. This has added an extra layer of uncertainty to the GBP/USD outlook as traders adopt a wait-and-see approach.
For now, all eyes are on Friday’s NFP release, with the outcome likely to set the tone for the pair in the near term. Analysts suggest the GBP/USD could extend its slide if the U.S. dollar strengthens further, while any recovery may depend on signs of resilience in the UK economy or a dovish pivot from the Fed.
