Usd Data Keeps Pressure On Sterling
US ISM Manufacturing PMI printed 52.7, its third month in expansion, while Prices Paid jumped to 78.3 from 70.5, the highest since 2022. ADP employment rose 62K versus 40K expected, and retail sales were 0.6% month-on-month. President Trump is scheduled to speak at 9 PM ET (01:00 GMT Thursday) with an update on Iran, as Operation Epic Fury reaches day 33. He has said the conflict could end in two to three weeks and linked a ceasefire to reopening the Strait of Hormuz. US initial jobless claims are forecast at 212K versus 210K previously, with Challenger job cuts also due. March NFP is released at 12:30 GMT on Friday, 3 April, with 60K expected after -92K, earnings seen at 0.3% m/m and 3.8% y/y, and unemployment at 4.4%, while UK and US markets are closed for Good Friday. As we look at the market on April 2, 2026, the current struggle in GBP/USD feels very familiar. We are reminded of this exact time in 2025 when the pair also saw a short-term bounce after a period of weakness. The same core issues of central bank policy differences and persistent inflation are driving trading decisions once again.Key Parallels With Last Year
Last year, Bank of England Governor Bailey was clear about pushing back on rate hike bets, which acted as a ceiling for the Pound. Today, we see a similar dynamic, with UK inflation proving sticky at 3.4% as of the last report, yet the central bank remains reluctant to commit to a path. This divergence weighs on Sterling, especially as the US Federal Reserve also holds a cautious line on policy. We recall the US ISM Prices Paid data from March 2025, which surged and fueled a pro-dollar stagflation narrative. This week, we received a similar warning sign as the March 2026 ISM Prices Paid index jumped to 55.8, marking its highest reading in more than a year. This suggests that price pressures are building within the supply chain, a factor that will keep the Fed from easing policy. In 2025, the market was fixated on geopolitical risk from the Iran conflict, which created significant uncertainty for energy prices and risk assets. While that specific event is behind us, we are navigating our own geopolitical landscape with ongoing conflicts that disrupt global trade and energy flows. This backdrop makes holding some downside protection through options a sensible strategy for the coming weeks. A critical lesson from last year was the volatility created by the Nonfarm Payrolls report being released on a Good Friday when liquidity was thin. In a direct repeat, this year’s March NFP data is scheduled for release tomorrow, April 3rd, which is again the Good Friday holiday. With economists forecasting another healthy gain of around 200,000 jobs, any significant deviation could trigger a sharp price gap when markets reopen on Monday. Given this environment, we should anticipate a rise in implied volatility leading into the holiday weekend. This setup favors using options to manage risk, such as buying puts or put spreads to protect against a sharp move lower if the NFP data is surprisingly strong. We see significant resistance near the 1.2800 level, and any rallies toward that zone will likely face selling pressure. Create your live VT Markets account and start trading now.
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