Dollar Stabilizes Pre-Jobs; Pound Falls 3rd Day UK

Dollar Stabilizes Pre-Jobs; Pound Falls 3rd Day UK

The U.S. dollar held a cautious tone as traders positioned ahead of the upcoming U.S. nonfarm payrolls. A stronger-than-expected ISM Services PMI contrasted with weaker labor indicators — including softer ADP private payrolls and a decline in job openings — leaving the currency rangebound. That uncertainty weighed on commodity-linked assets and gold. Meanwhile, the British pound fell for a third day, pressured more by external U.S. developments than by fresh UK-specific shocks.

U.S. Data Divergence Keeps the Dollar Rangebound

The biggest cross-currency influence over the past 24 hours was the mixed U.S. data set. December’s ISM Services PMI unexpectedly rose to 54.4, signaling continued expansion in the services sector and reinforcing the case for resilient domestic demand. At the same time, labor-related prints — notably ADP private payrolls and the JOLTS openings series — came in weaker than forecast, suggesting the employment side may be cooling.

Why ISM Services Matters

A stronger ISM Services reading supports the view that inflationary pressures from services activity could persist, which is relevant for Federal Reserve rate expectations. Services account for the bulk of U.S. GDP, so surprise strength here increases the chance that policymakers remain cautious about easing policy prematurely.

Labor Data and the Nonfarm Payrolls Spotlight

Labor releases have greater direct influence on the near-term path of the dollar because they feed into expectations for Fed policy tightening or patience. With ADP and JOLTS softer, traders have grown tentative, preferring to wait for the official nonfarm payrolls. That ‘wait-and-see’ stance is the key reason the dollar has been stabilizing rather than trending decisively.

Secondary effects included a dip in oil after reports of potential increases in Venezuelan crude supply to the U.S., which put downward pressure on the Canadian dollar and other commodity-linked currencies. Gold pulled back as stronger services data raised the opportunity cost of holding non‑yielding assets.

Pound Weakness: Short-Term Pressure, Longer-Term Upside

The British pound slipped to about $1.3444, marking a third straight daily decline. The immediate drivers are external: a firmer dollar driven by data-driven positioning and a slightly softer risk tone ahead of U.S. payrolls. The euro also edged higher versus sterling, reflecting modest cross-currency flows.

Near-Term Drivers

Short-term moves in GBP have been dominated by USD strength and risk sentiment. With investors wary ahead of U.S. labor data, demand for higher-liquidity currencies increased, nudging sterling lower despite the absence of new UK-specific negative news.

Medium-Term Outlook for Sterling

Analysts remain constructive on the pound over coming months, citing improving UK growth expectations, a reduction in fiscal and political tail risks, and policy clarity that could underpin GBP if economic momentum holds. In other words, current weakness looks tactical rather than structural.

Implications for Forex Traders and Investors

Volatility is likely to stay subdued until the U.S. payrolls print. Traders should watch three things closely: the nonfarm payrolls and wages data (for directional USD cues), ISM/services follow-through (for inflation expectations), and commodity flows that influence CAD and AUD. For GBP, near-term management of risk around USD moves is key, while longer-term positioning can consider the improving UK fundamentals referenced by economists.

Conclusion

Mixed U.S. economic signals have put the dollar in a holding pattern and amplified short-term moves in other currencies, notably the British pound and commodity-linked FX. The upcoming U.S. nonfarm payrolls will be the decisive data point that either confirms the dollar’s pause or triggers a more pronounced directional move across forex pairs.