Pound Rebounds as Weak US Jobs Data Eases Fed Rate Hike Pressure

The British pound is making a cautious recovery against the US dollar, with GBP/USD starting October at 1.3237. This rebound follows a sharp drop to three-month lows, spurred by a weaker-than-expected US jobs report. The US economy added just 29,000 jobs in September, far below the expected 90,000, which has reduced pressure on the Federal Reserve to raise interest rates in October. Instead, markets now see a higher likelihood of a rate hike in December.

In the UK, expectations for Bank of England (BoE) policy tightening have grown, with markets pricing in around 30 basis points of rate increases by year-end and 90 basis points by 2027. BoE officials, including Governor Andrew Bailey, have hinted at potential rate hikes if high energy prices continue to drive inflation above target. Additionally, Prime Minister Andy Burnham’s push for closer UK-EU ties has provided further support to the pound, with discussions ongoing about revisiting EU membership ahead of the next general election.

Technical analysis suggests GBP/USD remains in a downward trend, with key support levels at 1.3180, 1.3108, and 1.3044. The pair is currently trading within a descending channel, and a break below 1.3180 could accelerate the decline. Resistance is seen at 1.3303, with a return above this level needed to invalidate the bearish outlook. Indicators like the MACD and Stochastic oscillator support the downtrend, though a short-term correction may occur before further declines.