Official White House Photo by Carlos Fyfe.
Pound to Dollar exchange rate to trend higher, U.S. job data and tariff news in focus.
The British Pound is firmly bid against the U.S. Dollar on Monday morning as market players express their verdict over President Donald Trump's latest attempts to reinvigorate tariff tensions.
The Dollar is softer right across the FX scoreboard after Trump announced new tariffs following the close of play on Friday. He doubled steel and aluminium tariffs, to 50% starting June 4th.
He also said that China had "totally violated" the U.S.-China trade deal, bringing to an end the steady improvement in trade relations between the two countries.
U.S. Trade Representative Jamieson Greer, who helped establish the agreement made between the U.S. and China in Geneva, said China has been "slow" in rolling out its compliance to the recent trade agreement, "which is completely unacceptable and has to be addressed."
He said China has not followed through on withdrawing additional retaliation to earlier U.S. tariffs, such as curbing exports of rare earths that are critical to the tech, auto, aerospace, and defence sectors.
"If bilateral relations between the US and China sour further, the U.S. and Chinese governments may reinstate tariffs and non‑tariff measures on each other," says Kristina Clifton, Senior Currency Strategist at Commonwealth Bank of Australia.
The Dollar is proving to be the biggest loser in times of escalating trade tensions, and it is therefore little surprise to see the currency under pressure amidst signs that tensions are heating up again at the start of the new week.
The decline in USD allows the Pound-Dollar to shift above 1.35 once more, and we forecast a move to 1.3550 in the coming days. A restest of the 2025 high just below 1.36 then becomes visible.
Above: GBP/USD at daily intervals.
A look at the chart shows that the uptrend that has been in place during 2025 is still intact, with price action supported by a nine-day moving average that is pointed higher.
Domestically, there are no important data releases due from the UK, but the U.S. has a number of releases that require watching. After all, the Dollar has weakened this year under the assumption tariffs are bad for the economy. Traders will need to see evidence that this is the case.
So far, data has not been conclusive in showing a marked turn for the worse. The risk for GBP/USD is that incoming U.S. data beats expectations and recent tariff-inspired USD weakness is reversed.
U.S. ISM PMI figures for May are due for release on Monday and Wednesday, with JOLT job openings on Tuesday.
All bear watching. However, it is Friday's non-farm payroll figures that will be the clincher.
"The market is expecting a sharp slowdown in job creation for last month, as the labour market starts to crack under the weight of weak consumer and business confidence as tariff uncertainty weighs on the US’s economic prospects," says Kathleen Brooks, an analyst at XM.com.
The consensus looks for a 125k gain in payrolls for May, with a drop in private sector payrolls, and signs that jobs are being lost in the manufacturing sector. The unemployment rate is expected to remain steady at 4.2%.
"If the unemployment rate ticks up more than expected, we think the market reaction could be swift. The dollar is likely to fall, and the bond yields too, as the market rushes to price in rate cuts from a data-dependent Fed," says Brooks.