Investing.com -- GBP/USD posted modest gains on Friday to post a rare winning session, as the dollar wavered throughout a choppy day of trading after reports showed that the U.S. labor market added the highest number of jobs in June in nearly 10 months.
The currency pair wavered between 1.2881 and 1.3018, before settling at 1.2952, up 0.0046 or 0.36% on the session. With the slight gains, the British Pound recorded just its fourth winning session since voters in the U.K. surprisingly backed a referendum last month paving the way for a departure from the E.U. Since eclipsing 1.50 in the hours before the final vote was tallied, the Pound has tumbled nearly 13% over the last two weeks. On Wednesday, the Pound Sterling extended previous losses against the Dollar to slide below 1.28 for the first time in 31 years.
On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics said nonfarm payrolls rose by 287,000 in June, defying expectations for an increase of 180,000 and posting the highest monthly gains in eight months. The struggling labor market demonstrated broad signs of improvement last month following downwardly revised gains of 11,000 in May, providing indications that the weak hiring period in late-Spring could have been an anomaly. Nevertheless, the three-month moving average fell sharply to 147,300, in line with the Fed's expectations, down from 195,700 over the first quarter.
Within the report, the gains were concentrated in leisure and hospitality, health care and social assistance and financial assistance. The leisure and hospitality category added 58,000 positions for the month after remaining relatively flat in May. The telecommunications industry also experienced a snapback, adding 28,000 positions as thousands of Verizon workers returned to work following a labor dispute the previous month. At the same time, the struggling manufacturing sector reported a rare gain, adding 14,000 jobs on the month. Notably, approximately 90% of the job increases in June went to workers aged 55 or above.
Meanwhile, the unemployment rate rose moderately by 0.2 to 4.9%, remaining below the Fed's objective of 5%, while the labor force participation rate inched up by 0.1 to 62.7%. The U-6 Unemployment Rate, which measures workers who are marginally attached to the labor force and are no longer looking for full-time work, fell 0.1 on the month to a seasonally-adjusted 9.6%. By comparison, the Fed's preferred gauge for unemployment, stood at 10.5% a year ago at this time and peaked at 18.0% at the height of the Great Recession.
Earlier this week, the minutes from the Federal Open Market Committee's (FOMC) June meeting depicted a divided Fed on the long-term outlook for future interest rate hikes. At last month's FOMC monetary policy meeting, participants cited a slowing labor market and the threat of a British exit from the EU as main factors for holding interest rates steady. While Goldman Sachs Group Inc (NYSE:GS) said on Friday there is a 66% chance the Fed could raise interest rates this year, Fed futures rates from the CME Group (NASDAQ:CME) were still drastically lower following the report.
Any rate hikes by the Fed this year are viewed as bullish for the dollar, as investors pile into the greenback in order to capitalize on higher yields.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, hit a session-high of 96.71 before falling back to 96.31 at the close, down 0.02% on the session.