The British pound has faced significant selling pressure following a weaker-than-expected labor market report, which indicated an increase in unemployment to 4.3%. This is the highest level since May and shows signs of a cooling labor market, which could lead to rate cuts from the Bank of England. With job creation slowing down sharply, market sentiment is increasingly negative toward the pound in anticipation of changes to monetary policy.
The U.S. dollar remains buoyed by expectations of economic strength linked to President Trump's potential re-election. Market participants are factoring in his proposed tariffs and tighter immigration policies as catalysts for rising U.S. inflation, which in turn has altered expectations concerning the December Federal Reserve's interest rate decisions. As a result, the performance of the dollar continues to remain strong, significantly impacting the GBP/USD exchange rate.
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