Selling GBPUSD on robust US labor market report

GBPUSD is currently trading at around 1.35350, with the risk of a renewed downside very much intact. Strong US labor market data served as the dollar’s key driver. In August, the American economy added an impressive 162,000 jobs, far surpassing the expected 56,000, while unemployment stayed unchanged (4.1%). Following the release, the likelihood of a Federal Reserve’s (Fed) rate hike at the September 16 meeting surged to approximately 60%. Several major banks have also revised their forecasts and now anticipate a 25-basis-point increase both next month and later this year. Such a development would support US Treasury yields and boost the greenback’s appeal against other currencies.

In the UK, the picture looks a bit different. The Bank of England (BoE) keeps holding borrowing costs at 3.75%, with no near-term hawkish steps expected. The market is now pricing in only a 15% chance of a hike at the next meeting. However, the probability of policy tightening will have risen significantly by November due to persistent inflation and expensive energy. In addition, note that the Purchasing Managers’ Index (PMI) for the services sector jumped to 52.5 in August, though companies simultaneously reported increased price pressure—another argument for the BoE to lean hawkish. On the flip side, retail sales grew by just 0.7% year-on-year last month, showing the slowest pace in four months and being a clear sign of cautious behavior among British consumers.

Government debt remains an additional risk to the pound. The yield on 10-year UK bonds has recently climbed above 5.2%, reaching its highest level since 2007. This is an attractive investment option, but such a surge also heightens concerns over debt servicing costs and shrinking fiscal space. When global uncertainty intensifies, this factor tends to weigh on the pound, while the dollar benefits from its safe‑haven status.

The overall recommendation is to sell GBPUSD at the current price of 1.35350, targeting 1.31500 within one month. For better risk management, place a Stop Loss order at 1.36500.