Sterling Edges Lower as Markets Await Key US Jobs Report

The British pound edged lower against the U.S. dollar on Thursday, with major currency pairs trading in tight ranges as investors awaited the release of the crucial U.S. non-farm payrolls report. Hawkish commentary from Federal Reserve officials provided a floor for the dollar, limiting moves in the foreign exchange market.

As of 7:00 AM ET, the GBP/USD pair was down approximately 0.04% to 1.3462, while the EUR/USD pair fell 0.11% to 1.1542.

Dollar Steadies on Fed Remarks, Mixed Data

The dollar's stability was underpinned by recent hawkish remarks from Federal Reserve officials, including Mary Daly, Lisa Cook, and Neel Kashkari, who spoke on Wednesday. Their comments have reinforced the central bank's firm stance on inflation, keeping the greenback supported.

Recent U.S. economic data has presented a mixed picture, contributing to market caution ahead of the official jobs report:

• The ADP private payrolls report came in weak, showing an addition of only 44,000 jobs.
• In contrast, the ISM Services index was better than expected at 54.1, but its employment sub-index fell sharply to 47.5, signaling potential weakness in the labor market.

Sterling and Euro Await US Catalyst

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The pound's movement was not attributed to domestic factors. Last week, the Bank of England held interest rates steady, with Governor Andrew Bailey downplaying the immediate need for further policy tightening. According to the source, sterling has been supported above the $1.345 level primarily by broader geopolitical risk sentiment.

The euro remained near a seven-week high, finding support from expectations that falling energy prices will ease inflationary pressures in the Eurozone, along with better-than-expected German factory orders for June. However, its upward momentum is capped. "EUR/USD is testing the 1.1550-1.1560 resistance area again," said Francesco Pesole, an FX strategist at ING. "We do not see any fundamental catalyst for a bullish break before tomorrow’s U.S. data, unless it is a big disappointment."

Market Focus on Non-Farm Payrolls

The near-term direction for both currency pairs is expected to be dictated almost entirely by Friday's U.S. non-farm payrolls data. A weaker-than-expected report could reignite a dollar sell-off and push pairs like EUR/USD through key resistance levels. Conversely, a strong jobs number would likely reinforce the Fed's hawkish position and trigger a dollar rally.

Despite a significant drop in oil prices this week, which could ease inflation, market expectations for Fed rate cuts have remained largely unchanged. Current pricing suggests a 14 to 17 basis point cut in September, with 30 to 35 basis points of cuts priced in by December, according to Investing.com.