GBP/USD Volatility Ahead: Will US Jobs Data Boost Dollar or Pound?

The US labour report released on Friday showed that nonfarm Payrolls rose by 162K in August, exceeding expectations of 56K. The Unemployment Rate remained at 4.1%. This stronger-than-expected data briefly boosted the US Dollar, causing GBP/USD to dip to an intraday low of 1.3482 before rebounding to around 1.3512.

Fed Governor Christopher Waller stated that he is seeing signs of disinflation and believes the current policy setting could return inflation to the 2% target. However, he also noted that a September rate hike would be considered if August inflation runs hot. The CME FedWatch showed a 60% probability of a 25-basis-point increase at the September 15-16 meeting.

Meanwhile, in the UK, Bank of England Chief Economist Huw Pill reiterated his preference for a 4% Bank Rate, while markets expect rates to be held at 3.75% later this month.