Pound Sterling Slides vs Dollar After US Jobs Data

January 12, 2025 - Written by Tim Boyer

STORY LINK Pound Sterling Slides vs Dollar After US Jobs Data

Stronger-than-expected US data triggered a fresh surge in US and global bond yields on Friday.

Higher yields triggered fresh gains in the dollar and there were further concerns surrounding the UK outlook as yields also jumped towards 16-year highs.

The Pound to Dollar (GBP/USD) exchange rate slumped to 14-month lows just below 1.2200 before stabilising.

The Pound to Euro (GBP/EUR) exchange rate was marginally lower at 1.1925.

The latest US employment report recorded an increase in non-farm payrolls of 256,000 for December compared with consensus forecasts of around 165,000 while the November increase was revised slightly lower to 212,000 from the flash reading of 227,000.

The unemployment rate declined to 4.1% from 4.2% and compared with expectations of no change. There was no change in the participation rate and the reported number of people in employment increased by over 500,000 on the month.

The annual increase in average hourly earnings slowed marginally to 3.9% from 4.0%.

There was further selling pressure in bonds following the data with the US 10-year yield jumping to 4.78% from just below 4.70% and the highest level since October 2023.

There was also a shift in Federal Reserve interest rate expectations with markets pricing in only one full rate cut for 2025.

The sell-off in US bonds also had significant global ramifications with the UK 10-year yield jumping to near 4.90% and close to 16-year highs recorded earlier in the week.

The jump in domestic bond yields triggered fresh concern over the UK economic outlook with a further focus on debt-interest costs and overall fiscal policy.

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TAGS: Pound Dollar Forecasts