GBP/USD Hits 3-Year Highs as USD Weakens Ahead of NFP Report

GBP/USD Hits 3-Year Highs as USD Weakens Ahead of NFP Report

The GBP/USD currency pair briefly surged past the 1.3600 level on Thursday, marking the first time in over three years that the Pound Sterling has reached such heights against the US Dollar. However, bullish momentum is clouded by growing uncertainty ahead of the US Nonfarm Payrolls (NFP) report, set to be released on Friday.

Pound Strength vs. USD Weakness

Despite a sluggish global risk environment, Sterling remains resilient as the US Dollar (USD) continues to face downward pressure. The Greenback's struggles are driven by declining ADP employment data and market concerns over slowing US job creation.

Markets are forecasting that May’s NFP release will show a net gain of 130,000 jobs, well below April’s 177,000—signaling a potential cooling in the US labor market.

Market Sentiment: Cautious Optimism

Although the Pound’s climb above 1.3600 briefly ignited optimism, traders are cautious. The rally lacks strong conviction amid broader market anxiety surrounding labor data and US fiscal policy. Investors remain defensive, seeking clarity from the upcoming NFP numbers, which are likely to shape short-term USD sentiment.

Political Distraction: Trump vs. Musk Twitter Feud

Further muddying market sentiment is an ongoing feud between former President Donald Trump and Elon Musk, who previously led the now-defunct Department of Government Efficiency (DOGE). Musk has openly criticized Trump’s newly proposed “big beautiful budget bill,” claiming it fails to continue the fiscal tightening policies Musk implemented during Trump’s second term.

The political drama has spilled onto social media, injecting uncertainty into the markets as traders digest the implications of a divided Republican front ahead of the 2025 elections.

GBP/USD Technical Outlook

• Resistance: The 1.3600 handle remains key; a daily close above it could open room to test 1.3665.
• Support: Immediate downside support is seen at 1.3520, followed by 1.3475.

With the NFP report looming large, traders should expect heightened volatility in the GBP/USD pair heading into the weekend.

Related Reads on Tredu:

• How NFP Data Impacts Major Currency Pairs
• GBP/USD: Key Technical Levels This Month
• Politics & Forex: How Headlines Move Markets