Pound to Dollar Forecast: Shock US Jobs Report Rescues Sterling

Modified: Sunday, 3 August 2025 18:30 BST - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: Shock US Jobs Report Rescues Sterling

Pound Sterling remained under pressure ahead of Friday’s New York open and the Pound to Dollar (GBP/USD) exchange rate slumped to 11-week lows close to 1.3140.

Ahead of the US data, Scotiabank noted; “The latest bear run is threatening the mid-May lows and opening up the potential for a push toward anticipated support at the psychologically important 1.28 level, around the 200 day MA (1.2978)”

There was, however, a sharp reversal following the latest US jobs data with GBP/USD jumping to near 1.3300 as the dollar posted sharp losses amid renewed speculation that the Fed would cut rates at the September meeting.

Traders will be watching closely whether the Pound can sustain the recovery.

A sustained move above 1.3370 would alleviate underlying pressure.

The US employment report recorded an increase in non-farm payrolls of 73,000 for July compared with consensus forecasts of around 105,000. There was also a large downward revision for the June data to 14,000 compared with the previous estimate of 147,000.

Manufacturing jobs declined for the third successive month while there was a 10,000 decline in government jobs. Demand for temporary jobs also declined for the third successive month.


The unemployment rate edged higher to 4.2% from 4.1% which was in line with market expectations and the household survey recorded that the number of people employed declined by over 250,000 for the month.

Average hourly earnings increased 0.3% on the month with an annual increase of 3.9%.

Scotiabank was not convinced that sustained dollar selling would return; “Soft data may rekindle September Fed easing bets and weigh on the dollar somewhat but, as it stands, July is in the book with a solid overall gain in the DXY - one that is strong enough on the charts to suggest that the dollar’s broader correction from its very weak H1 performance can extend a bit more.”

Earlier the Pound was undermined by the latest IoD business confidence survey.

The headline confidence indicator slumped to a record low of -72 from -53% the previous month and the weakest reading since the survey started in 2016.

IoD chief economist Anna Leach blamed the recent tax increases; “We’re now living with the economic consequences of those tax hikes, even as uncertainty around future costs once again builds.”

Other surveys have painted a more optimistic note with the Lloyds Bank Business Barometer, for example, hitting a 20-year high for July. There was notable optimism in the services sector, but manufacturing and construction remained under pressure.


The IoD survey, however, garnered much more traction in the media and markets and there was a negative Pound impact.

Scotiabank commented; “the pound’s yield spreads have been trending gently lower since April, eroding a critical source of support.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Pound Dollar Forecasts