Fundamental Overview

GBP/USD advanced toward 1.2700 during the European trading hours on Thursday but reversed its direction in the American session to end the day with small losses. The pair holds comfortably above 1.2600 early Friday as market participants await labor market data from the US.

After suffering large losses against its major rivals in the first half of the week, the US Dollar gained traction in the second half of the day on Thursday.

Wall Street's main indexes turned south after the opening bell and safe-haven flows helped the USD find demand. Additionally, hawkish comments from Federal Reserve (Fed) officials cause market participants to reassess the probability of a Fed policy pivot in June and provided an additional boost to the currency.

Minneapolis Fed President Neel Kashkari said that he wonders if the Fed should cut rates at all this year if inflation continues to move sideways, while Richmond Fed President Thomas Barking argued that it is difficult to reconcile the current breadth of inflation with the progress the Fed needs to see for a reduction in interest rates.

Later in the day, the US Bureau of Labor Statistics (BLS) will publish the jobs report for March. Nonfarm Payroll (NFP) are forecast to rise 200,000 following the 275,000 increase recorded in February. The immediate reaction to the could be straightforward, with an upbeat reading supporting the USD and a disappointing print hurting the currency, unless there are significant revisions to previous prints.

In case the data arrives near the market expectation, investors could react to the wage inflation data. On a yearly basis, Average Hourly Earnings are forecast to rise 4.1%, below the February's growth of 4.3%.