April 5, 2025 – Written by Frank Davies
STORY LINK US Jobs Data Stems Panic Selling, GBP/EUR and GBP/USD Recover
Markets have attempted to stabilise after the US jobs data, but the underlying mood remains extremely fragile.
Earlier, confidence took a further dive following China’s announcement that it would impose retaliatory 34% tariffs on imports from the US.
The move triggered further concerns over retaliation by other countries and increased fears that the global economy would slide into recession.
The FTSE 100 index plunged 4% to 2025 lows before a recovery.
The Pound to Dollar (GBP/USD) exchange rate dipped sharply to lows at 1.2965 before trading just above the 1.3000 level after the US data.
According to Scotiabank; “GBPUSD has retreated back to the psychologically important 1.30 level and momentum is fading from overbought levels. The near-term range is now expected to be bound between support in the upper-1.28s and resistance above 1.31.”
The Pound to Euro (GBP/EUR) exchange rate slumped to 7-month lows near 1.1750 before a recovery to 1.1800.
SocGen sees crucial near-term GBP/EUR support around 1.1750.
The US employment report recorded an increase in non-farm payrolls of 228,000 for March compared with consensus forecasts of around 135,000, but the February increase was revised lower to 117,000 from the flash reading of 151,000.
The unemployment rate ticked higher to 4.2% from 4.1% while average earnings increased 3.8% over the year from 4.0% previously.
The data will provide immediate relief surrounding the US economy, but markets are also focussed more on the impact of US tariffs and potential trade wars.
Goldman Sachs’s Lindsay Rosner commented; “Today’s better than expected jobs report will help ease fears of an immediate softening in the US labor market. However, this number has become a side dish with the market just focusing on the entrée: tariffs.”
There are also still reservations surrounding the labour market after Challenger recorded a huge job in Federal layoffs.
ING commented; “The rise in job cut announcements during March, tracked by Challenger and released this week, was frankly astonishing. It eclipsed anything we saw in the height of the financial crisis or dot-com bubble.”
According to Scotiabank; “The USD is likely to retain a defensive undertone for the foreseeable future as investors re-allocate capital to more appealing locales.”
The UK construction PMI index recovered slightly to 46.4 for March from 44.6 the previous month.
Tim Moore, Economics Director at S&P Global Market Intelligence, commented; “March data highlighted a challenging month for UK construction companies as sharply reduced order volumes continued to weigh on overall workloads.”
Global developments are likely to dominate in the short term with developments in risk appetite and equities likely to be the crucial element.
Scotiabank commented; “Broader developments are likely to continue driving movement in GBP, and the near-term outlook for reconciliation on trade appears to be slim as media reports suggest that the US’s 10% tariff rate on UK goods may be a permanent baseline.”
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