The pound sterling (GBP) rose to a one-month high near 1.3350 against the US dollar (USD) during the European trading session on Thursday. The GBP/USD pair is showing strength as the US Dollar is on the back foot amid bullish expectations from the Federal Reserve (Fed) and the Pound Sterling is outperforming since the budget announcement last week.
At the time of writing, the US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, is hovering around its fresh monthly low of 98.80 posted on Wednesday.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% at the December policy meeting is 89%, up from 83% seen a week ago.
Traders are confident that the Fed will cut interest rates next week as the United States (US) labor market conditions continue to deteriorate, partly due to increasing Artificial Intelligence (AI) use globally.
US ADP showed on Wednesday that 32 thousand jobs were lost by private employers in November, missing the estimate of a gain of 5 thousand. Signs of weak labor demand typically lead to less restrictive monetary policy by the Fed.
Meanwhile, the US ISM Services PMI unexpectedly rose to 52.6 in November, while it was expected to fall to 52.1 from the previous reading of 52.4.
US dollar price this week
The table below shows the percentage change of the US Dollar (USD) against the major currencies listed this week. The US dollar was the weakest against the Japanese yen.
| USD | EUR | gbp | JPY | scurvy | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.71% | -0.94% | -1.02% | -0.05% | -0.98% | -0.68% | -0.47% | |
| EUR | 0.71% | -0.24% | -0.32% | 0.66% | -0.28% | 0.02% | 0.23% | |
| gbp | 0.94% | 0.24% | 0.17% | 0.90% | -0.04% | 0.25% | 0.47% | |
| JPY | 1.02% | 0.32% | -0.17% | 0.96% | 0.01% | 0.32% | 0.53% | |
| scurvy | 0.05% | -0.66% | -0.90% | -0.96% | -0.97% | -0.61% | -0.43% | |
| AUD | 0.98% | 0.28% | 0.04% | -0.01% | 0.97% | 0.30% | 0.51% | |
| NZD | 0.68% | -0.02% | -0.25% | -0.32% | 0.61% | -0.30% | 0.21% | |
| CHF | 0.47% | -0.23% | -0.47% | -0.53% | 0.43% | -0.51% | -0.21% |
The heat map shows the percentage change of major currencies against each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select US Dollar from the left column and move to Japanese Yen along the horizontal line, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Daily Digest Market Movers: Pound Sterling’s Rally May Halt Amid Soft BoE Bets
- The pound sterling maintained Wednesday’s gains against its major currency counterparts on Thursday, extending its rally since the United Kingdom (UK) budget announcement on November 26.
- Market experts broadly believe that the absence of any major tax burden on households and the Labor Party maintaining its self-imposed rule of avoiding new borrowing for day-to-day spending has helped the British currency come out of its recent weakness.
- However, Goldman Sachs analysts expect the relief rally to be short-lived amid concerns over the UK economic outlook and faster-than-expected monetary easing by the Bank of England (BoE).
- “From here, we believe the dovish trend in UK data and the prospects of a faster-than-expected BoE easing remain key to sterling’s underperformance,” the analysts said.
- The BoE is expected to cut interest rates by 25 basis points (bps) to 3.75% in a monetary policy announcement on December 18 as conditions in the UK job market continue to deteriorate.
- Contrary to market expectations, BoE rate-setting member Megan Green said earlier this week that she would support an interest rate cut only if the labor market and consumption declined further.
- Going forward, the GBP/USD pair will be influenced by the preliminary Michigan Consumer Sentiment Index and consumer inflation expectations data for December, which will be released on Friday. On the same day, US personal consumption expenditure price index (PCE) data for September will also be released. However, its impact on expectations of the US interest rate outlook may be negligible as the data is delayed and refers to September.
Technical Analysis: GBP/USD holds above 20-day EMA
The pound sterling is trading near its monthly high of 1.3350 posted on Wednesday. The pair remains above the rising 20-day exponential moving average (EMA) at 1.3215, which maintains a positive near-term bias. The 20-day EMA has declined more in recent sessions and the decline remains shallow.
The RSI at 61 (Bullish) confirms the momentum improvement. Measured from a high of 1.3728 to a low of 1.3017, a 50% retracement at 1.3373 caps immediate upside, while a pullback would target the 38.2% retracement at 1.3289.
Momentum remains supportive while price remains above the moving average. A daily close above the 50% retracement would strengthen the bullish tone and open scope for a continuation towards the October 17 high of 1.3471. Conversely, failure to break that barrier will keep the pair bullish, with pullbacks leaning toward the 38.2% area and trend support.
(The technical analysis for this story was written with the help of AI tools)
economic indicators
adp employment change
ADP Employment Change is a gauge of private sector employment released by Automatic Data Processing Inc., the largest payroll processor in the US. It measures changes in the number of privately employed people in the US. Generally speaking, an increase in the indicator has a positive impact on consumer spending and is a driver of economic growth. So higher readings are traditionally seen as bullish for the US dollar (USD), while lower readings are seen as bearish.
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Last Release:
Wed Dec 03, 2025 13:15
frequency:
Monthly
Real:
-32K
Consensus:
5K
Of earlier:
42K
Source:
ADP Research Institute
