Pound Sterling Edges Higher Against US Dollar Ahead of US Nonfarm Payrolls Data
March 6, 2026 – The Pound Sterling (GBP) made modest gains against the US Dollar (USD) during early Friday Asian trading, inching closer to the 1.3365 level. This movement comes as market participants await the release of the highly anticipated US Nonfarm Payrolls (NFP) data for February, which is scheduled for publication at 13:30 GMT.
As of writing, the US Dollar Index (DXY)—which measures the value of the Greenback against a basket of six major currencies—has declined by approximately 0.1%, trading near the 99.00 mark. The slight weakening of the USD has provided some support to the GBP/USD currency pair.
US Employment Data Sets Market Tone
Traders’ focus is firmly set on the upcoming NFP report, widely regarded as a critical indicator for gauging the health of the US labor market and the broader economy. The February data is expected to show a notable slowdown in hiring, with forecasts predicting the addition of around 59,000 jobs, a sharp decline from January’s robust gain of 130,000. The unemployment rate is anticipated to hold steady at 4.3%.
The NFP figures are particularly important because they influence the Federal Reserve’s monetary policy outlook. Following upbeat ADP Employment data released earlier this week—which showed a private sector job increase of 63,000 in February—market sentiment has shifted. The positive ADP report has reduced expectations for a dovish Federal Reserve stance later this year.
Currently, the CME FedWatch Tool indicates that the probability of the Fed maintaining steady interest rates at its July policy meeting has increased to 47.4%, up from 33.4% just a week ago. Investors are closely monitoring whether inflationary pressures and labor market strength will prompt the Fed to adjust its policy trajectory.
Geopolitical Factors Support US Dollar
Broader risk-off sentiment persists in global markets amid ongoing tensions in the Middle East involving the United States, Israel, and Iran. This uncertainty has bolstered demand for safe-haven assets, including the US Dollar, underpinning its relative strength despite the recent slight pullback.
UK Monetary Policy Outlook Influenced by Energy Prices
Meanwhile, in the United Kingdom, rising energy prices stemming from the Middle East conflict appear to be altering expectations around the Bank of England’s (BoE) upcoming policy decision on March 19. Market analysts increasingly doubt that the BoE will reduce interest rates as previously anticipated.
Higher energy costs pose an upside risk to inflation, which has already been well above the BoE’s 2% target. As a result, officials may be reluctant to ease monetary conditions amid persistent inflationary pressures.
“Unless tensions in the Middle East swiftly de-escalate, we doubt the Bank will cut rates on March 19 as we previously thought,” noted analysts at Capital Economics, according to Reuters.
Understanding the ADP Employment Change Indicator
The ADP Employment Change report, released monthly by Automatic Data Processing Inc., surveys employment changes within the US private sector and serves as an early gauge ahead of the official NFP release. Typically, strong ADP data signals positive momentum in labor market growth and consumer spending, which tends to be bullish for the US Dollar. Conversely, weaker readings may weigh on the currency.
Last Wednesday, the ADP report indicated a gain of 63,000 jobs, surpassing the consensus expectation of 50,000, marking a significant improvement from the prior month’s 22,000. Looking Ahead
Traders and investors worldwide are bracing for potential volatility around the release of the US NFP report later today, which may set the tone for USD directional moves and influence central bank policy expectations going forward. Meanwhile, geopolitical developments and inflation dynamics continue to shape currency markets on both sides of the Atlantic.
— Sagar Dua, FXStreet
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