Both currencies were shaken by Friday’s jobs data, which revealed a decline in the U.S. employment rate but a lower-than-expected number of new jobs. • The GBP/USD pair erased gains of over 1% on Friday. The British pound had been performing well, reaching a session high of $1.3230 and approaching its 2024 peak, before the U.S. dollar halted its progress. U.S. jobs data triggered a swift rally in the greenback, causing the pound to slide, wiping out gains from the previous two days. • The U.S. economy added 142,000 new jobs in August, falling short of the 164,000 consensus estimate. Why did the dollar rise on lower job numbers? Markets had been expecting a 25bps interest rate cut from the Federal Reserve, but the weaker jobs report has led traders to speculate that a quarter-point cut might not be enough, boosting the outlook for the U.S. dollar. However, this could change. • A surprise 50bps cut to interest rates could weaken the U.S. dollar, driving it lower while providing a lift to stocks. Lower rates make borrowing cheaper, encouraging investors to shift toward riskier assets and away from safe-haven investments. As a result, the GBP/USD exchange rate is expected to experience volatility leading up to the Fed’s interest rate decision on September 18.