• USD/CAD falls to near 1.4300 after the release of the employment data for both the US and Canada.
• Surprisingly upbeat Canadian employment data has provided some support to the Canadian Dollar.
• The US NFP data misses estimates and came in lower at 143K.

The USD/CAD pair falls to near 1.4300 in North American trading hours on Friday. The Loonie pair drops after the release of the employment data for January in both the United States (US) and Canada.

The Canadian labor market report came in surprisingly stronger than expected. The report showed that the economy added 76K workers in January, beating the estimate of 25K but remaining lower than the December reading of 91K. The Unemployment Rate decelerated to 6.6% from expectations of 6.8% and the previous release of 6.7%.

Signs of strong labor market data are expected to provide a big relief for the Canadian economy, which is facing the risk of economic slowdown. It appears that the impact of interest rate cuts yet taken by the Bank of Canada (BoC) is coming into effect. However, upbeat labor market data is unlikely to force traders to pare BoC dovish bets as risks of inflation undershooting the central bank’s target of 2%

Meanwhile, the US employment data showed that the labor demand remains weak. The Nonfarm Payrolls (NFP) report showed that employers hired added 143K job-seekers in January, significantly lower than estimates of 170K and the former release of 307K, upwardly revised from 256K. The Unemployment Rate decelerates to 4% from the estimates and the prior reading of 4.1%.

However, the Average Hourly Earnings data, a key measure of wage growth, surprisingly came in higher than projected. On year, the wage growth measure rose at a faster pace of 4.1%, compared to 3.9% in December. Month-on-month Average Hourly Earnings data rose at a faster pace of 0.5% against estimates and the former release of 0.3%.

Hot wage growth data is likely to boost market speculation that the Federal Reserve (Fed) will keep interest rates at their current levels for longer.

• GBP/USD ascends to 1.2451, buoyed by disappointing US NFP figures showing only 143K jobs added.
• US unemployment rate improves to 4%, with a notable increase in Average Hourly Earnings hinting at robust consumer spending.
• Market anticipates Fed rate cut in June 2025, while recent BoE rate cut minimally impacts Pound’s performance.

The Pound Sterling registered gains versus the US Dollar on Friday following a softer-than-expected US Nonfarm Payrolls report. The GBP/USD seesawed within a 1.2418 – 1.2491 range and traded at 1.2451, up 0.15%.

The Pound appreciates following a weak US jobs report

January US NFP data was softer than expected, with the economy adding 143K people to the workforce, below the 170K estimated. The Unemployment Rate ticked lower from 4.1% to 4%, a sign that the labor market remains strong. At the same time, Average Hourly Earnings surged, which would likely keep consumer spending strong.

Following the data, futures linked to the Fed funds rate showed that traders estimate the Fed’s first rate cut in 2025 will be in June, as expected following the US Central Bank’s first policy meeting.

Meanwhile, the Pound remained unfazed after the Bank of England (BoE) cut rates by 25 basis points on Thursday, reducing the interest rate differential between the US and the UK.

Recently, the University of Michigan revealed that Consumer Sentiment deteriorated in its preliminary February reading, with the index dipping from 71.1 to 57.8, as expected.

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend remains intact, but in the short term, it could rise toward the 50-day Simple Moving Average (SMA) at 1.2493. If buyers clear the latter the 1.2500 psychological level is up next.

Momentum turned bullish, as depicted by the Relative Strength Index (RSI). If GBP/USD achieves a daily close above 1.2500, buyers could drive the exchange rate to its December 30 peak of 1.2607.

On the other hand, if GBP/USD tumbles below 1.2450, the next support would be the February 6 swing low of 1.2359, ahead of 1.2300.