Pound Sterling to Dollar Forecast: GBP Slides After Strong US Jobs Report

Modified: Friday, 5 June 2026 16:31 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: GBP Slides After Strong US Jobs Report

The Pound to Dollar exchange rate (GBP/USD) dropped sharply to 1.3375, down around 0.35% on the day, after the latest US labour market report comfortably exceeded expectations.

US non-farm payrolls rose by 172,000 in May, more than double consensus forecasts of 85,000, while unemployment held steady at 4.3%, reinforcing expectations that the Federal Reserve will maintain a hawkish stance and providing broad support for the US Dollar.

GBP/USD Forecasts: Finds Support Near 1.34

The Pound to Dollar (GBP/USD) exchange rate again found support just above the 1.3400 level on Thursday and rallied to near 1.3460.

The dollar lost ground amid fresh hopes that there could be some form of US-Iran deal. There was an element of relief in the bond market as the 10-year yield drifted lower while equities rallied from intra-day lows, but the PMI construction index slipped further to a 6-year low.

UoB considers that GBP/USD still has work to do; “as long as GBP holds below 1.3470 (‘strong resistance’ level), the risk of GBP breaking below 1.3390 will increase over the next few days.”

ING maintains a positive short-term view on the US currency; “It’s hard to argue against dollar strength at this juncture. Data continues to paint a picture of resilience for the US economy – ADP payrolls and ISM services were both firm yesterday – and fresh US-Iran military exchanges have driven a risk-off shift in global markets.”

ING is also cautious over the Middle East situation; “Yesterday’s House resolution to end the war is meaningful, but it doesn’t block new military operations. It highlights domestic pressure for a peace deal, but markets already understand this, and it has not yet translated into tangible progress in negotiations.”

As far as data is concerned, US initial jobless claims increased to 225,000 in the latest week from 215,000 the previous week while there was a 3.4% annual increase in Challenger job cuts.

The US employment report will be released on Friday. Consensus forecasts are for an increase in non-farm payrolls of around 85,000 from 115,000 the previous month with the unemployment rate holding at 4.3%.

According to Bank of America; “We look for another upside NFP surprise (95k forecast vs. 85k consensus) with risks to the upside, and an unchanged unemployment rate of 4.3%. Education & health should continue to lead, followed by trade & transport and leisure & hospitality.”

MUFG commented; “Jobs data today and tomorrow will be key ahead of Fed Chair Kevin Warsh’s first monetary policy meeting and press conference. How influential will Warsh be? And what will his initial leaning be regarding inflation risks?

It added; “Whether tomorrow’s NFP is strong and whether the SoH (Strait of Hormuz)has reopened by then will be important. If the escalation in clashes in the Middle East persist, the pricing of a rate hike this year will increase further and with the data holding up the positive momentum for the US dollar looks set to continue.”

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TAGS: Pound Dollar Forecasts