Pound Gains Against Dollar on Softer US Jobs Data

The pound strengthened against the US dollar on Friday following softer-than-expected US jobs data. The UK's currency rose by 0.4% to 1.2550, after touching a session low of 1.2460 earlier.

The US Department of Labor reported nonfarm payrolls rose by 175,000 in April, below the 240,000 forecast by economists polled by Reuters. The unemployment rate ticked up to 3.9% from 3.8% in March, and average hourly earnings increased 0.2% month-over-month.

The dollar index fell 0.3% to 105.20 after the release, reinforcing market bets that the Federal Reserve may begin cutting interest rates later this year. Traders now price in a 45% chance of a rate cut at the September meeting, up from 38% before the data.

The divergence in monetary policy expectations between the US and UK has provided some support for the pound, although analysts caution that the UK's economic outlook remains uncertain. The Bank of England is expected to hold rates steady at its next meeting in June, with markets pricing a first cut in August or September.