Pound tops $1.35 after US economy sheds jobs in July

The British pound climbed above the 1.3500 mark against the US dollar on Friday after the US economy unexpectedly shed jobs in July, intensifying bets that the Federal Reserve will ease monetary policy. The GBP/USD pair touched a high of 1.3505 during the session, according to exchange rate data.exchangerates

Jobs Report Misses by Wide Margin

The Bureau of Labor Statistics reported that nonfarm payrolls fell by 23,000 in July, a sharp miss against the consensus forecast of 83,000 to 88,000 new jobs. The report also included a downward revision to June's figure, from 129,000 to 63,000. The unemployment rate edged down to 4.1% from 4.2% the prior month.bls+4

Average hourly earnings increased by just 2 cents for the month, bringing the 12-month gain down to 3.2%, below the 3.5% forecast and the lowest reading since May 2021, according to CNBC. The combination of job losses and stagnant wages represents the weakest labor market print in months, following what NBC News described as "a sudden reversal" after four months of positive growth.cnbc+1

Sterling Finds Additional Support

Beyond dollar weakness, the pound has benefited from a shift in speculative positioning. The latest CFTC Commitments of Traders report showed net speculative short positions on the pound narrowed to £-57.8K from £-64.8K the prior week, a reduction of £7,000 that suggests easing bearish sentiment among hedge funds and institutional investors.cryptorank

Exchange rate history shows the pound traded around 1.3483 on August 6 before the data release, rising to the 1.3491-1.3505 range on August 7 as the dollar sold off broadly.mtfxgroup+1

What Comes Next

With the labor market now contracting, futures markets are likely to price in a higher probability of Federal Reserve rate cuts in the months ahead. For the pound, technical analysts note that a sustained move above the 1.3500-1.3560 zone could open the path toward 1.3600. Traders will be watching upcoming Bank of England communications and UK economic data for further cues on whether sterling can extend its gains or whether profit-taking sets in near overbought levels.