• The Pound Sterling struggles to gain ground near 1.3100 against the US Dollar as traders pare Fed large rate cut bets.
• US NFP report for September showed a sharp uptick in payrolls and wage growth.
• Growing Middle East tensions weigh heavily on risk-sensitive assets.

The Pound Sterling (GBP) remains on the backfoot near the key level of 1.3100 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair faces pressure as the US Dollar holds gains to near an almost seven-week high, driven by robust growth in the United States (US) Nonfarm Payrolls (NFP) for September, released on Friday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its winning streak for the sixth trading day on Monday to near 102.50.

All components of the US labor market report for September pointed to a resilient economy. Fresh payrolls came in at 254K, the highest level seen since March, and the Unemployment Rate dropped to 4.1%. Average Hourly Earnings, a key measure of wage growth that drives consumer spending, rose at a robust pace of 4% year-over-year.

Surprisingly upbeat labor market data forced traders to unwind bets supporting a Federal Reserve’s (Fed) larger-than-usual rate cut of 50 basis points (bps) in November. According to the CME FedWatch tool, the Fed's probability of reducing interest rates by 50 bps has been entirely wiped out, and a quarter-to-a-percentage rate cut is now widely anticipated.