Above: EUR is outperforming all apart from JPY following U.S. job data surprise.
Pound Sterling sinks against the Euro following a shock U.S. jobs report.
The Pound to Euro exchange rate (GBP/EUR) dropped sharply following an unexpectedly weak U.S. jobs report that warned the world's largest economy was not as robust as once assumed.
U.S. stock markets were routed and Europe followed suit, confirming a sharp deterioration in sentiment that traditionally weighs on the GBP/EUR pair.
U.S. bond yields and the Dollar slid sharply, and the Euro was there to pick up the pieces, rallying against most of its peers, save for the safe-haven Japanese Yen.
This confirms that the Euro is considered a safe-haven alternative when the U.S. economy is under scrutiny, and explains why it is cleaning up in global FX.
"It's been a big day in FX markets," says Chris Turner, head of FX research at ING Bank. "It looks highly likely that the dollar has marked out a significant corrective high."
This puts a corresponding low under the Euro-Dollar, which surges higher from lows at 1.14 to 1.1557. The EUR/USD's 1.20% daily gain outstrips the GBP/USD's 0.40% advance, which translates into a default decline of 0.80% for GBP/EUR.
GBP/EUR had touched 1.16 on Thursday, but the subsequent rejection of this level suggests we will be seeing 1.1415 before long.
Above: GBP/EUR at daily intervals.
For much of 2025, the Euro has traded as an alternative to the Dollar as investors grew nervous about America's prospects under Donald Trump's trade wars and domestic realignment.
After a brief hiatus in July, this theme has been rejuvenated by news the U.S. economy added just 73K jobs in July, massively undershooting the consensus estimate of 110K and signalling deteriorating fundamentals. This suggests the Federal Reserve might have to step in and cut interest rates sooner rather than later in an effort to underpin a slowing economy and preserve jobs.
The news prompted traders to go all-in on a September interest rate cut, having been fully prepared for the Federal Reserve to keep interest rates unchanged going into the report.
The stance is understandable: the jobs surprise comes just two days after Fed Chair Jerome Powell warned there was no need to cut interest rates owing to ongoing economic resilience.
We suspect much of the negative market reaction we are seeing might have a lot to do with Powell's misreading of the situation. It also vindicates U.S. President Donald Trump, who has persistently accused the Fed of being too slow to recognise the need for lower interest rates.