Pound Sterling gains against US Dollar as focus shifts to US-China trade talks

• The Pound Sterling moves higher against the US Dollar ahead of trade talks between the US and China.
• Investors await the UK Employment and monthly GDP data later this week.
• US President Trump criticizes the Fed for not lowering interest rates after US NFP data showed underlying weakness.

The Pound Sterling (GBP) rises to near 1.3570 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair gains as the US Dollar underperforms across the board amid uncertainty ahead of trade talks between the United States (US) and China in London later in the day. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, corrects to near 99.00 after a decent upside move on Friday.

Both Washington and Beijing have confirmed that their delegates will negotiate trade terms. The announcement arrived at a time when the US is grappling with some cracks in the labor market, and the Chinese economy is facing deflation. 

On Friday, the US Nonfarm Payrolls (NFP) report for May showed that the cumulative jobs added in March and April were 95K lower than previously reported. However, the number of job seekers recruited in May came in at 139K, slightly higher than expectations of 130K. Earlier on Monday, the National Bureau of Statistics of China reported that the prices of goods and services, as measured by the Consumer Price Index (CPI), deflated steadily by 0.1% year-on-year in May.

US President Donald Trump has expressed confidence in a post on Truth Social over the weekend, stating that trade discussions between negotiators from both nations would go smoothly. “I am pleased to announce that Secretary of the Treasury Bessent, Secretary of Commerce Lutnick, and US Trade Representative, Ambassador Greer, will be meeting in London on Monday, June 9, 2025, with Representatives of China, with reference to the Trade Deal. The meeting should go very well,” Trump wrote.

Technically, the announcement of US-China trade talks should have had a positive impact on the US Dollar. However, the currency is down as market experts believe that sentiment will remain fragile until a meaningful outcome is seen. Analysts at Saxo Markets said, "A deal to keep talking might be better than nothing, but unless we see a concrete breakthrough, the impact on sentiment is likely to remain muted,” Reuters reported.

Daily digest market movers: Pound Sterling rises ahead of UK Employment data

• The Pound Sterling trades higher against its major peers at the start of a United Kingdom (UK) economic data-packed week. Investors will pay close attention to the UK employment data for the three months ending April and the monthly Gross Domestic Product (GDP) data for April, which are scheduled to be released on Tuesday and Thursday, respectively.
• The labor market data is expected to show that the ILO Unemployment Rate accelerated to 4.6%, the highest level seen since July 2021. A higher jobless rate could prompt market expectations that the Bank of England (BoE) would cut interest rates again sooner.
• In the upcoming monetary policy announcement on June 19, the BoE is almost certain to hold interest rates steady at 4.25%. Faster-than-expected growth in the UK Consumer Price Index (CPI) data for April is the dominant reason behind traders remaining confident about the BoE leaving borrowing rates unchanged this month.
• On Friday, BoE Monetary Policy Committee (MPC) member Megan Greene warned in a conference in Croatia that the recent increase in price pressures could prove to be persistent, given her recent experience with inflation. "The last time we had a lot of second-round effects. We’re hoping that we won’t have second-round effects this time around, but we’re not sanguine about it." 
• On Tuesday, investors will also focus on Average Earnings data, a key measure of wage growth that drives inflation in the services sector. Average Earnings, both Excluding and Including bonuses, are expected to have risen almost steadily by 5.5% on a yearly basis.
• In the US, investors will focus on the US Consumer Price Index (CPI) data for May, which will be released on Wednesday. The CPI report is expected to show that inflationary pressures grew at a faster pace, a scenario that will discourage Federal Reserve (Fed) officials from supporting interest rate cuts in the near term.
• Meanwhile, US President Trump has criticized the Fed again for not lowering interest rates. “Too late at the Fed is a disaster! Europe has had 10 rate cuts, we have had none. Despite him, our Country is doing great. Go for a full point, Rocket Fuel!, Trump wrote on Truth Social after the release of the US NFP report.

Technical Analysis: Pound Sterling climbs to near 1.3570

The Pound Sterling jumps to near 1.3570 against the US Dollar on Monday, aiming to revisit the three-year high of 1.3617 reached on June 5. The outlook for the pair remains firm as the 20-day Exponential Moving Average (EMA) slopes higher around 1.3464.

The 14-day Relative Strength Index (RSI) holds above 60.00, suggesting that the bullish momentum is intact.

On the upside, the January 13, 2022, high of 1.3750 will be the key hurdle for the pair. Looking down, the horizontal line plotted from the September 26 high of 1.3434 will act as a key support zone.