Why the EUR/GBP Pair is Surging: US Jobs Miss and BoE Rate Cut in Focus
A surprising labor market slowdown in the U.S. and a shifting tone from the Bank of England are shaking the FX market
The EUR/GBP currency pair has surged to 0.8710 in Friday trading, hitting its highest level since mid-May. This movement has sparked intense interest among currency traders and macro investors, with market sentiment shifting rapidly in response to two key global drivers: weaker-than-expected U.S. labor data and a growing chorus calling for a rate cut from the Bank of England (BoE).
Nonfarm payrolls in the U.S. for July came in at 187,000, falling short of the expected 200,000. Meanwhile, the unemployment rate ticked up to 4.0% from 3.9%, and wage growth was weaker than anticipated. These figures painted a clear picture of a cooling labor market in the U.S., increasing speculation that the Federal Reserve may soon pause its rate-hike campaign.
This backdrop put downward pressure on the U.S. dollar and increased the relative attractiveness of the euro, particularly as traders rotated capital into European assets. While the EUR/USD pair also moved higher, the real surprise came from the EUR/GBP breakout, as investors took a closer look at the shifting tone from the BoE.
For months, the Bank of England has maintained a hawkish posture amid stubborn inflation and tight labor market conditions. However, recent economic data and dovish comments from some Monetary Policy Committee (MPC) members have begun to change the narrative. Speculation is mounting that the BoE may cut interest rates before year-end, particularly if inflation continues to fall faster than expected or if growth data weakens further.
This dual pressure — a weakening U.S. jobs picture and the anticipation of looser BoE policy — has turned EUR/GBP into one of the hottest trades in FX this week. Market analysts believe that if these trends continue, the pair could retest the 0.8800 level, last seen in March. The euro (EUR) and the British pound (GBP) are two of the most heavily traded currencies globally, and this dynamic is being closely watched by hedge funds and institutional players alike.
Short-term volatility is expected to remain elevated, especially with more key data coming next week, including UK GDP figures and further speeches from central bankers. For traders, this moment represents a key inflection point — one where global macro forces are in clear play, and opportunities are forming for those who can interpret the signals fast.
As the FX market digests these developments, the spotlight remains firmly on the eurozone and the UK. Whether the BoE acts preemptively or waits for more economic deterioration, one thing is clear: EUR/GBP is no longer a sleepy pair, and volatility may be here to stay.