GBP/USD Forecast: Pound Sterling Surges as Weak US Payrolls Sinks USD

Modified: Thursday, 2 July 2026 22:06 BST - Written by John Cameron

STORY LINK GBP/USD Forecast: Pound Sterling Surges as Weak US Payrolls Sinks USD

The Pound to US Dollar (GBP/USD) exchange rate rallied strongly on Thursday after weaker-than-expected US labour market data sparked a broad selloff in the 'Greenback'.

At the time of writing, GBP/USD was trading near $1.3360, up around 0.6% compared with Thursday's opening levels.

The US Dollar (USD) came under heavy pressure on Thursday following the release of the latest US non-farm payrolls report from the Bureau of Labor Statistics, which pointed to a marked slowdown in hiring during June.

The US economy added only 57,000 jobs over the month, significantly below expectations for an increase of roughly 110,000 and representing the weakest payroll gain for several months.

The report also included downward revisions to employment figures for both April and May, reinforcing concerns that conditions in the US labour market are cooling faster than previously believed.

The disappointing data prompted investors to reassess the outlook for Federal Reserve policy, with market pricing for an interest rate increase before the end of the summer falling sharply from around 70% to close to 50% in the aftermath of the release.

The Pound (GBP) also traded with a firmer tone on Thursday as investors became increasingly confident that the UK's political transition will be smoother than previously feared.

With Andy Burnham expected to become the next Prime Minister without facing a leadership contest, markets have continued to unwind some of the political uncertainty that had weighed on Sterling in recent weeks.

Additional support came from Burnham's repeated assurances that his government would continue to adhere to Labour's existing fiscal framework, including commitments to balancing day-to-day public spending through tax receipts and reducing debt as a proportion of GDP over the longer term.

Near-Term GBP/USD Forecast: Bailey Comments in Focus

Looking ahead to Friday's session, attention is likely to centre on a scheduled speech from Bank of England (BoE) Governor Andrew Bailey, which could provide fresh direction for the Pound to US Dollar (GBP/USD) exchange rate.

Bailey adopted a relatively hawkish stance earlier in the week, indicating that interest rate cuts are not currently under consideration while also warning that higher energy costs could yet feed through into inflation.

Should he reiterate this message, Sterling may be able to extend its recent gains.

For the US Dollar, however, volatility may be subdued heading into the weekend, with US financial markets closed in observance of the Independence Day holiday, resulting in lighter trading volumes.

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TAGS: Pound Dollar Forecasts