GBP rises against the US Dollar in Thursday’s North American session after new US jobs data weakened the USD, despite a strong Nonfarm Payrolls report released the day before.
UK economic growth came in weaker than expected, but the Pound still held gains. GBP/USD was at 1.3664, up 0.28%.
Relative Surprises Drive Currency Moves
Looking back at the situation in 2025, we saw the Pound gain against the Dollar even when our own GDP data was soft. The market was more focused on unexpectedly high US jobless claims, which weakened the Dollar at that moment. This shows how relative data surprises, not just absolute economic strength, can drive short-term currency moves.
Today, the dynamic has shifted as we see a clearer divergence in central bank policy. The Bank of England has been cautious, holding its bank rate steady at 4.5% in its last meeting, while the US Federal Reserve has already signaled a pause in its own easing cycle. This policy gap is now the primary driver for GBP/USD, which is currently trading much lower, around 1.2850.
Recent figures from the Office for National Statistics showed UK fourth-quarter GDP growth for 2025 was a sluggish 0.1%, confirming the weak domestic picture we saw forming last year. In contrast, the latest US GDP figures showed a more robust 1.9% annualized growth, reinforcing the Dollar’s relative strength. This underlying economic data is now weighing more heavily on Sterling than temporary labor market blips.
For derivative traders, this suggests continued headwinds for the Pound. Implied volatility for GBP/USD options has been climbing, recently hitting 8.9% for three-month contracts, reflecting the market’s uncertainty over the Bank of England’s next move. We should consider buying put options to hedge against or profit from a potential slide below the key 1.2800 support level.
Labor Markets Remain A Key Watch
We must also continue to watch the labor markets, which were the main focus in that 2025 report. Last week’s US jobless claims fell to 205,000, a historically low number that signals continued tightness in the American labor market. This contrasts with the UK’s slightly rising unemployment rate of 4.4%, a divergence that reinforces the fundamental case for a stronger Dollar in the coming weeks.
