Pound sterling is trading flat near 1.2800 versus the US dollar ahead of the May NFP report.

In Friday’s European session, the pound sterling (GBP) consolidated in a tight range near 1.2800 against the US dollar (USD). The GBPUSD pair is struggling to find a direction as investors anticipate the May Nonfarm Payrolls (NFP) report from the United States (US). Which will provide new insights into the country’s labor sector.

The US nonfarm payrolls report will have a big impact on expectations for Fed interest rate decreases in September.

The employment report is projected to indicate that firms added 185K payrolls, up from 175K Jobs were added in April. The unemployment rate is expected to have remained stable at 3.9%. Moreover Investors will also watch the Average Hourly Earnings report. Which measures wage growth momentum. Moreover Annual average hourly earnings are expected to have increased consistently by 3.9%. Wage growth is expected to have increased by 0.3% month over month, up from 0.2% previously.

Moreover Stronger-than-expected wage growth and payroll figures would reduce expectations that the Federal Reserve (Fed) will begin lowering interest rates at the September meeting, but bad numbers would increase them.

Daily Market movers: Pound Sterling trades back and forth ahead of the US NFP.

The pound sterling is trading near 1.2800 versus the US dollar ahead of the US NFP report. Which will affect market anticipation about Fed rate reduction in September. Furtgermore The official employment numbers will demonstrate how the Fed’s restrictive monetary policy framework affects labor demand.
Many labor market-related economic indicators have recently shown that job circumstances are normalizing. The US JOLTS Job vacancies statistics for April and ADP Employment Change for May revealed. That new vacancies and private payrolls were fewer than predicted. Furthermore On Thursday, the US Department of Labor reported. That first jobless claims for the week ending May 31 increased more than expected. This adds to indications that the labor market is weakening.
Moreover Rising uncertainties about the US labor market have prompted market speculation. That the Fed may begin decreasing its benchmark borrowing rates in September. The CME The FedWatch tool shows that traders expect a 68% possibility of rate reduction in that month, up from 54.5% a week ago.

The UK’s high wage growth remains a major contributor to stubborn service inflation.

In the United Kingdom, the Pound Sterling will be guided by the February-April employment data, which will be released on Tuesday. For the third time in a row, the country’s employment rate has fallen. Indications of further layoffs might harm the Pound Sterling by increasing traders’ bets on early rate cuts by the Bank of England (BoE).
Moreover Investors will also look at the UK Average Earnings data, which is a measure of salary growth. The UK’s robust wage growth momentum has remained a primary driver of high service inflation, which has been a hurdle for pricing pressures to return to the 2% target.