GBP/USD gathers strength above 1.3150, US NFP data looms

• GBP/USD gains traction near 1.3180 in Friday’s Asian session. 
• US ADP private sector employment rose 99,000 in August vs. 111,000 prior. 
• Investors see a roughly one-in-four chance that the BoE will cut rates in the September meeting. 

The GBP/USD pair trades in positive territory for the third consecutive day around 1.3180 on Friday during the Asian trading hours. The persistent US Dollar (USD) weakness provides some support to the major pair. Market players will closely monitor the US August Nonfarm Payrolls (NFP) data, which is due later on Friday. 

The Automatic Data Processing (ADP) reported on Thursday that private sector payrolls grew at the weakest pace in over three and a half years in August. The US private sector added 99,000 new jobs in August, less than the downwardly revised 111,000 in July and below the forecast of 145,000.

Markets expect the Federal Reserve (Fed) to lower interest rates when it meets on September 17-18. The Bureau of Labor Statistics will release the highly-anticipated Nonfarm Payrolls later in the day, which is expected to see 160,000 job additions in the US economy in August. This report became a key event for shaping market expectations of the Fed’s policy rate. The weaker-than-expected outcome could trigger a large Fed rate cut and further undermine the USD. 

On the other hand, the modest Bank of England (BoE) interest rate cut expectations lifts the Pound Sterling (GBP). BoE Governor Andrew Bailey said last month that he thought longer-term inflation pressures were easing but additional rate cuts would not be rushed because it was still too soon to declare victory over inflation. Investors see a nearly 25% chance that the BoE will cut interest rates at its September 12 policy meeting, but the probability of a cut is fully priced for November.