GBP/USD loses ground near 1.2150 as the latest nonfarm payroll data buoy the dollar. The US NFP report cited the addition of 256,000 fresh workers in December, up from 212,000, surpassing the expected 164,000. The Unemployment Rate fell to 4.1% from 4.2%, beating expectations. Wage growth, measured by Average Hourly Earnings, rose 3.9% YoY, slightly below the previous 4%. Monthly earnings increased by 0.3%, meeting forecasts but slowing from November's 0.4%.

An unexpected fall in the unemployment rate could fuel hawkish expectations from the Federal Reserve (Fed), which would support the greenback. Conversely, sterling continues to face pressure amid rising concerns over the UK's fiscal health following increased borrowing costs. Investors will closely watch Chancellor Rachel Reeves's actions regarding fiscal regulations. In the upcoming week, the Philly Fed Manufacturing Index, BoE Quarterly Bulletin, PPI and CPI figures from both regions, the UK's monthly GDP figures, as well as addresses by prominent members of the FOMC, will influence GBP/USD movements.

EUR/GBP Strengthens Amid UK's Stagflation Concerns

EUR/GBP continues its upward momentum near 0.8420 amid dismal market sentiment surrounding the euro. Although the market expects further policy easing from the European Central Bank (ECB) in 2025 amidst increasing inflation in the Eurozone, uncertainty surrounding US President-elect Donald Trump's administration policies raises concerns about a potential global trade war, causing fluctuations in the single currency. On the other hand, sterling sinks amid fears of stagflation in the United Kingdom.

The rising cost of borrowing has sparked worries about the UK's financial health. Many are concerned that higher interest payments might lead the government to raise taxes or cut back on public spending, damaging the economic outlook. In the upcoming week, the ECB Monetary Policy Meeting Accounts and the UK's economic docket—including monthly GDP, Consumer Price Index, Retail Sales, and Industrial Production—will be key driving factors for EUR/GBP movements.

GBP/USD Sinks on Strong Jobs Report

GBP/USD loses ground near 1.2150 as the latest nonfarm payroll data buoy the dollar. The US NFP report cited the addition of 256,000 fresh workers in December, up from 212,000, surpassing the expected 164,000. The Unemployment Rate fell to 4.1% from 4.2%, beating expectations. Wage growth, measured by Average Hourly Earnings, rose 3.9% YoY, slightly below the previous 4%. Monthly earnings increased by 0.3%, meeting forecasts but slowing from November's 0.4%. An unexpected fall in the unemployment rate could fuel hawkish expectations from the Federal Reserve (Fed), which would support the greenback.

Conversely, sterling continues to face pressure amid rising concerns over the UK's fiscal health following increased borrowing costs. Investors will closely watch Chancellor Rachel Reeves's actions regarding fiscal regulations. In the upcoming week, the Philly Fed Manufacturing Index, BoE Quarterly Bulletin, PPI and CPI figures from both regions, the UK's monthly GDP figures, as well as addresses by prominent members of the FOMC, will influence GBP/USD movements.

GBP/JPY Muted Amid Fresh Debt Concerns

GBP/JPY edges lower to 191.28 amid market anxiety over the UK's economic outlook. Increased UK gilt yields have led to a significant rise in government borrowing costs, which may escalate the nation's debt burden and potentially force Chancellor Rachel Reeves to raise taxes to meet fiscal regulations. Additionally, uncertainty over US trade policies under the administration of President-elect Donald Trump and the UK's debt could dampen economic growth prospects.

On the Japanese front, the yen strengthens as the BoJ's cautious interest rate stance ahead of the January monetary policy review fuels market optimism amidst evolving economic conditions. Recent robust wage growth data showed Labor Cash Earnings rose 3.0% YoY in November, while Real Wages, adjusted for inflation, fell 0.3% YoY. The GBP/JPY exchange rate will hinge on broader market sentiment today, with limited activity expected due to Japan's bank holiday and no key UK data releases.

NZD/USD Weighed Down by China's Trade Balance Data

The NZD/USD pair continues its downward trend near 0.5544 following China's Trade Balance data release. China's trade surplus expanded to CNY 752.91 billion in December from CNY 692.8 billion in November, driven by a robust 10.9% YoY increase in exports. Meanwhile, imports increased by 1.3% yearly, slightly above the 1.2% growth in November. Additionally, market speculation of aggressive policy easing by the Reserve Bank of New Zealand (RBNZ) and cautious sentiment restricted the kiwi’s movement.

Conversely, Friday's US Nonfarm Payrolls report exceeded expectations, with the economy adding 256,000 jobs in December, up from 212,000, and beating the forecast of 160,000, while the unemployment rate unexpectedly dropped to 4.1% from 4.2% in November. This supports expectations that the Fed will pause its rate-cutting cycle at its January policy meeting. In upcoming sessions, December's US Producer Price Index (PPI) and the Consumer Price Index (CPI) data will significantly influence NZD/USD movements.

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