Sterling Faces Extended Weakness as US Jobs Data Goes Missing

BridgeJumper · 2026-01-06T16:33:31+00:00

Pound Sterling faced a sharp decline, dropping 0.67% against the dollar following disappointing UK inflation data, which sparked renewed selling pressure. Uncertainty around US employment data further complicated market conditions, dampening expectations for a Federal Reserve rate cut.

BridgeJumper

2026-01-06 16:33:31

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Pound Sterling retreated sharply on Wednesday, with GBP/USD slipping roughly 0.67% down to the 1.3060 level amid a broader risk-off sentiment gripping foreign exchange markets. The currency’s slide extended a fourth consecutive losing session, as disappointing UK inflation readings failed to provide the catalyst traders had anticipated.

CPI Letdown Accelerates GBP Decline

Wednesday’s UK Consumer Price Index release, which many hoped would stabilize Pound flows, instead triggered fresh selling pressure. Rather than sparking a recovery, the data sent cable bids tumbling to multi-week lows. The disconnect between expectations and reality underscored how sensitive GBP/USD remains to monetary policy divergence between the Bank of England and the Federal Reserve.

To put recent volatility into perspective, fluctuations of this magnitude matter significantly to international transactions—movements of just 0.67% on sterling translate to meaningful swings when converting large sums, such as the equivalent value of 2 billion pounds in US dollars, which shifts by millions with each percentage point move.

Fed Rate Cut Odds Cool as NFP Uncertainty Builds

The Federal Reserve’s situation added another layer of complexity to the week’s trading narrative. The US Bureau of Labor Statistics has preemptively shelved October’s Nonfarm Payrolls release due to data gaps from the recent government shutdown. This unprecedented move left rate markets scrambling to reprice rate-cut expectations.

CME FedWatch Tool readings reveal a stark shift in Fed policy bets: the probability of a December rate cut has collapsed to approximately 30%, down sharply from previous levels. With October NFP data unavailable, policymakers face an awkward information void stretching into the new year.

What’s Next for GBP/USD

September’s employment figures arrive Thursday, though with October’s data already scrapped, traders question whether a single month’s report can genuinely move the needle. The lack of fresh US labor market intelligence could paradoxically support volatility in GBP/USD, as markets grapple with incomplete forward guidance ahead of year-end policy decisions.

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