GBPUSD Under Pressure: US Labour Market Data Crushes Bulls’ Hopes

Blue River

Forex

Economic

Technical Analysis

Summary:

The GBPUSD rate is falling amid US dollar strength following robust US labour market data. The price currently stands at 1.3504. Find out more in our analysis for 4 June 2025.

The GBPUSD rate is falling for the second consecutive trading session due to USD strength following robust US labour market data and in anticipation of crucial employment reports. GBPUSD technical analysis points to continued selling pressure, which increases the likelihood of a breakout below the support level and a move down to 1.3375.

The GBPUSD rate is falling amid US dollar strength following robust US labour market data. The price currently stands at 1.3504. Find out more in our analysis for 4 June 2025.

GBPUSD forecast: key trading points

●US job openings rose to 7.391 million in April

●Robust JOLTS data boosted support for the USD

●The ADP private sector employment report is due today

●GBPUSD forecast for 4 June 2025: 1.3450 and 1.3600

Fundamental analysis

The GBPUSD rate is declining for the second consecutive session. Sellers re-entered the market after testing the key resistance level at 1.3565. On the daily chart, a Double Top reversal pattern appears to be forming, increasing the likelihood of a move down towards the next target at 1.3445.

The US dollar gained support from the latest labour market data. On Tuesday, the JOLTS job openings report showed an unexpected rise to 7.391 million in April, well above the consensus forecast of 7.167 million. This indicates continued resilience of the US labour market and reinforces expectations for a more hawkish Federal Reserve stance, putting pressure on the GBPUSD rate.

Investor focus now shifts to the upcoming US data. The ADP private sector employment report is due today, followed by the key May employment data on Friday, which could heavily influence the pair’s next move.

GBPUSD technical analysis

The GBPUSD rate continues its downward trajectory and is currently testing the lower boundary of the ascending channel. Today’s GBPUSD forecast suggests a breakout below the support level, with the pair gaining downward momentum towards 1.3375. Technical indicators support the bearish outlook: the price has consolidated below the Moving Average, and the Stochastic Oscillator is bouncing off the resistance line. A confident breakout below the 1.3480 level would confirm the bearish scenario.

GBPUSD Under Pressure: US Labour Market Data Crushes Bulls’ Hopes_1

Source: RoboForex

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Economic

Rising Bond Yields Prompt Reassessment of BoJ’s QT Strategy

The Bank of Japan may soon suspend its steady retreat from government bond purchases as higher long-term yields begin to raise alarm. According to Makoto Sakurai, former BoJ policy board member, officials are expected to reconsider the pace of tapering during their meeting in June 2025, as part of planning for the fiscal year beginning April 2026.

Since mid-2024, the central bank has trimmed its bond purchases by ¥400 billion (approximately $2.8 billion) per quarter. However, recent increases in super-long bond yields are challenging the effectiveness and sustainability of this quantitative tightening (QT) process. Sakurai suggests this shift in the yield curve reflects growing skepticism toward continued asset reduction without destabilizing the bond market.

Tapering May Pause, but Policy Normalization Remains Gradual

While the potential halt does not signify a full reversal of policy normalization, it underlines BoJ’s pragmatic approach to balance yield stability with exit strategies from its ultra-loose monetary stance. Japan’s bond market is particularly sensitive due to decades of financial repression, aging demographics, and low inflation expectations.

The BoJ is expected to clarify its stance at the next monetary policy meeting on June 17, where policymakers will assess whether the quarterly bond purchase reductions should continue into the second quarter of 2025. Should they pause reductions, it would mark a strategic recalibration rather than a policy pivot.

Implications for Domestic and Global Markets

Any pause in QT by the BoJ could influence global fixed-income markets, especially as Japanese investors are major holders of international debt. Rising domestic yields may prompt capital repatriation, putting pressure on U.S. and European bond markets. Furthermore, global investors closely watch BoJ's actions for signals about the broader monetary tightening cycle across major economies.

Domestically, a pause in tapering may also help stabilize the Japanese yen, which has been under pressure due to interest rate differentials. Maintaining current bond purchase levels could ease volatility in Japan’s debt market, especially for pension funds and insurers holding ultra-long bonds.

BoJ’s potential suspension of bond purchase reductions reflects a growing sensitivity to market conditions as Japan cautiously emerges from decades of deflationary policy. As policymakers weigh inflation control against financial stability, Japan’s next steps could shape not only its own economic recovery but also influence global liquidity and investment flows in the years ahead.

Source: Reuters

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Economic

China–U.S. Trade War

Rising Tensions Over Alleged Trade Deal Violations

In a firm diplomatic statement issued on June 3, 2025, Chinese Foreign Ministry spokesperson Lin Jian responded to accusations made by U.S. officials, particularly President Donald Trump, who claimed that China had violated the recently negotiated trade agreement between the two nations. Lin emphasized that Beijing had acted responsibly and honored the outcomes of the trade consultations held last month in Geneva.

This comes amid heightened friction, with Washington implementing increasingly aggressive measures, including new export controls on semiconductors, a ban on Electronic Design Automation (EDA) tools, and visa restrictions targeting Chinese students. These moves, according to Beijing, undermine the spirit of mutual understanding and breach the foundations of ongoing negotiations.

Chinese Response: A Call for Facts and Restraint

Lin Jian dismissed the U.S. accusations as groundless and criticized the American administration for distorting facts and undermining bilateral commitments. He asserted that these actions are damaging China’s legitimate economic interests and called for Washington to “respect the facts, cease spreading false information, and correct its errors” in order to preserve what had been agreed upon.

The diplomatic tone was noticeably more assertive than previous statements, reflecting China’s growing frustration with the Trump administration’s rapid shifts in policy, especially regarding technology exports and educational exchanges.

Trump’s Counterclaim: Beijing Broke the Deal

President Trump, in a series of posts on social media platform X, alleged that China had completely violated the bilateral tariff agreement reached in early May. He portrayed the deal as a goodwill gesture meant to stabilize China’s economy amid global economic challenges, but argued that Beijing had failed to uphold its side of the arrangement. However, Trump did not provide specific details on how the alleged breach occurred, leaving room for ambiguity and further diplomatic confusion.

Broader Implications: Trade War Reignited?

This renewed spat threatens to derail fragile negotiations and casts doubt on any near-term resolution. Although both sides previously expressed optimism about a potential trade deal—especially with talks progressing before the self-imposed July 9 deadline—rhetorical escalations like these may stall or derail the momentum.

The imposition of a 50% tariff on imported steel and aluminum by the U.S. on June 4 has already prompted calls for WTO intervention from both China and the EU. Coupled with China’s call for the U.S. to stop spreading misinformation, the path toward trade normalization now appears increasingly uncertain.

The exchange of accusations between Washington and Beijing reveals the fragility of the current diplomatic process. Without concrete clarification or de-escalatory gestures, mistrust will likely deepen, potentially reigniting a broader trade conflict. As both nations position themselves ahead of a pivotal July deadline, the international community watches closely for signs of either reconciliation or a full-blown trade rupture.

Source: China Daily

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Economic

PMI Uptick Signals Early Recovery But Below Expansion Threshold

The manufacturing sector in Vietnam is beginning to show early signs of recovery. According to S&P Global, the Purchasing Managers’ Index (PMI) increased to 49.8 in May 2025 from April’s 45.6, its highest in recent months. While this upward trend marks progress, the index remains below the 50-point threshold that distinguishes expansion from contraction. It indicates that although conditions are stabilizing, business sentiment and output are still cautious and far from robust.

The main drag on Vietnam’s manufacturing outlook continues to be export demand, especially from the US. Uncertainty surrounding tariffs and supply chain disruptions has weakened new orders, with overseas demand declining even faster than domestic. Industries such as electronics and textiles, which are heavily reliant on the US market, have reported major setbacks. Despite this, domestic production showed a modest rebound, aided by slightly improved tariff clarity and strategic adjustments by manufacturers such as extended shifts and capacity realignment.

Lower Input Costs Offer Temporary Relief Amid Depressed Demand

To stimulate weak demand, many suppliers have lowered prices, leading to reduced input costs. While this offers temporary financial relief for price-sensitive industries such as consumer goods and low-margin exporters, it also reflects prolonged demand weakness. The reduction in material costs may help improve short-term profit margins, but could simultaneously cap revenue growth if prices stay low and order volumes don’t rise.

There’s a mild improvement in business confidence, attributed to a more predictable tariff environment. However, skepticism remains, especially regarding potential abrupt changes in policy and ongoing global demand uncertainty. While the May PMI shows a more positive trajectory, it has not yet restored long-term investor confidence, and many manufacturers remain hesitant to scale operations aggressively.

Regional Comparison Highlights Vietnam’s Vulnerability

The broader Asian manufacturing context paints a similarly fragile picture. PMI levels in Japan (49.4), South Korea (47.7), and China (also contracting) highlight that Vietnam’s challenges are part of a regional trend driven by global trade disputes and uneven recovery. With Vietnam’s high trade openness, its vulnerability to global fluctuations becomes more pronounced, especially as intra-ASEAN demand remains tepid.

In electronics hubs like Yen Phong and VSIP, firms are scaling back shifts and focusing on higher-margin contracts. In textiles, exporters are shifting attention to markets like Europe and Japan, but face reduced price competitiveness due to elevated logistics costs and stricter quality requirements. The challenge lies in sustaining production levels while navigating fewer orders and longer sales cycles.

Technology, Market Diversification, and State Support

To weather this period, Vietnamese firms are urged to invest in productivity-enhancing technologies, improve product quality, and diversify export destinations. Cost reductions from declining input prices may offer short-term breathing room, particularly for wood and agro-processing sectors. Yet, without a stronger rebound in global demand, these gains may be offset by falling selling prices.

State support is also critical. Policies that streamline bureaucracy, enhance infrastructure, and support digital transformation can help manufacturers transition from reactive adjustments to sustainable growth strategies. A coordinated push between the public and private sectors will be essential to unlock the full recovery potential of Vietnam’s industrial economy.

Vietnam’s manufacturing sector is showing resilience, but recovery is tentative and uneven. Unless global trade conditions improve and domestic reforms accelerate, the path forward will require continued vigilance, adaptability, and investment in innovation to ensure that this fragile recovery becomes durable and broad-based.

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China–U.S. Trade War

Commodity

Escalating Tensions in Strategic Mineral Trade

China’s suspension of rare earth mineral and magnet exports since April 2025 has added new urgency to global concerns over resource dependency. These materials—vital for manufacturing electric vehicles, drones, semiconductors, and defense systems—have become a flashpoint in an already fragile geopolitical trade environment. Although Beijing has not formally linked this move to any political retaliation, its timing aligns with increasing trade friction between China and major economies, particularly over technological dominance and supply chain control.

This disruption is not just symbolic; it presents a real operational risk for companies reliant on precision components, many of which incorporate rare earth elements like neodymium and dysprosium. Major automakers from Germany, India, and the US have issued stark warnings about looming production halts if supply channels remain blocked. Notably, shipments have stalled at several Chinese ports while the country finalizes a new management system for rare earth exports, deepening the short-term unpredictability.

Industrial Impact and Global Scramble for Alternatives

The rare earth supply crisis affects entire industrial ecosystems. In Germany, the auto industry association VDA has emphasized that continued shortages could “inevitably lead to production stops.” In India, Bajaj Auto—a leading EV manufacturer—has flagged potential setbacks to its electric vehicle output. Similarly, in the US, major players such as General Motors, Toyota, and Hyundai have petitioned the federal government to intervene, citing urgent needs for materials used in gearboxes, sensors, electronic systems, and motors.

According to the Auto Innovation Alliance, a sustained shortage would severely impair the production of essential components, from steering systems to EV batteries. What makes the issue more pressing is the lack of ready alternatives. While some rare earth deposits exist in the US, Australia, and parts of Africa, refining capacity remains overwhelmingly concentrated in China, giving it a strategic chokehold on the supply chain.

Policy and Diplomatic Responses Taking Shape

In response to the crisis, several governments and industry coalitions are mobilizing diplomatically. Japan is preparing a high-level trade delegation to Beijing, aiming to negotiate expedited approvals. European diplomats are also pushing for emergency meetings with China’s Ministry of Commerce. Meanwhile, Indian authorities have begun direct negotiations to unlock supply routes for their auto sector. These moves suggest a growing realization among policymakers that rare earths are no longer just raw materials—they are geopolitical tools.

Former U.S. Assistant Secretary of State for Energy Resources Frank Fannon has warned that such a scenario was foreseeable. He advocates for an immediate investment push into domestic extraction and processing capabilities, framing the issue as one of national resilience. His perspective reflects a broader consensus: building diversified and reliable rare earth supply chains is no longer optional but imperative.

Toward Strategic Resource Security

The rare earth export restrictions from China have exposed a structural flaw in global manufacturing: overdependence on a single supplier for strategic inputs. The automotive and electronics industries are especially vulnerable, and unless diversified sourcing and domestic capabilities are accelerated, disruptions may become recurring threats.

In the short term, diplomatic pressure may yield temporary relief, but long-term stability hinges on strategic investments in rare earth mining, processing infrastructure, and recycling technologies across multiple regions. The current crisis, while disruptive, may catalyze a much-needed global rethinking of supply chain sovereignty and industrial policy.

Source: Reuters

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Economic

Russia and Ethiopia: A Strategic Alignment for De-Dollarization

Amid growing geopolitical tensions and economic sanctions, Russia has found a like-minded partner in Ethiopia within the expanding BRICS alliance. Both countries have expressed strong commitment to reducing reliance on the U.S. dollar, seeking greater monetary independence and transactional efficiency through the use of their own currencies—the ruble and the birr.

This cooperation reflects a strategic response to mounting external pressures. For Russia, the push to “de-dollarize” is an economic survival tactic against the West’s financial blockade. Ethiopia, on the other hand, views this shift as an opportunity to diversify its trade exposure, bolster regional economic integration, and reduce transaction costs.

From Principles to Practice: Bilateral Currency Agreements Take Root

Early 2025 marked the beginning of formalized trade settlements between Russia and Ethiopia using local currencies. Though still in its infancy, the bilateral arrangement has been publicly endorsed by both governments. Ethiopian Ambassador to Russia, Genet Teshome Jirru, confirmed that transactions in ruble and birr have started and are expected to grow as technical infrastructure and mutual confidence improve.

While exact figures remain undisclosed, both nations stress the long-term benefits of currency localization—chiefly avoiding exchange rate volatility, bypassing global financial bottlenecks like SWIFT, and stimulating domestic industries by reducing dependency on third-party currencies.

Broader Implications for Global Trade and BRICS Strategy

The collaboration between Russia and Ethiopia signals a larger trend in the Global South: the desire to reshape the post-Bretton Woods monetary system. The BRICS bloc—especially its expanded cohort—has become the leading voice in championing a multipolar financial order. This includes discussions around creating a BRICS currency, reinforcing national payment infrastructures, and advancing digital currency research as alternatives to the dollar.

Other regions have followed similar paths. China, Brazil, Argentina, and several ASEAN countries have recently intensified efforts to trade using local currencies or regional digital payment systems. Together, these shifts hint at a systemic recalibration—one where global economic influence is no longer tethered solely to the U.S. Federal Reserve’s decisions.

Challenges and Long-Term Outlook

Despite enthusiasm, challenges remain. Technical compatibility between financial systems, trust in currency stability, and capital control regulations may hinder widespread adoption. Nonetheless, the direction is clear: as emerging economies become more assertive and interconnected, they are actively shaping a new global financial architecture.

Russia’s alignment with Ethiopia may seem modest in volume compared to its trade with China or India, but symbolically, it underscores BRICS’s mission to amplify economic sovereignty among developing nations. If successful, such initiatives could inspire other bilateral or regional currency agreements—further decentralizing global finance.

The Russia-Ethiopia initiative is more than a workaround for sanctions—it is a deliberate move toward a de-dollarized, decentralized economic system. As more nations re-evaluate their dependence on the U.S. dollar, the prospect of a multipolar monetary environment becomes increasingly plausible. This could reshape how trade is conducted, how currencies are valued, and how economic alliances are formed, especially within the BRICS framework and beyond.

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Commodity

China–U.S. Trade War

A Sharp Turn in U.S. Trade Policy

On June 3, 2025, President Donald Trump signed an executive order raising tariffs on all imported steel and aluminum products to 50%, effective immediately the following day. This escalation marks a significant intensification of U.S. trade protectionism and follows a series of aggressive tariff moves by the Trump administration aimed at reducing what it describes as “unfair trade practices” and “global overcapacity.”

According to the White House, the policy aims to strengthen critical domestic industries that have been undercut by subsidized foreign production, particularly from countries such as China. However, this move comes with exceptions: imports from the United Kingdom will remain subject to the prior 25% tariff rate, as both sides continue negotiations on quotas and tariff-related issues under an existing trade agreement.

Industry Backdrop and Political Signaling

Trump's announcement was made during a speech at a US Steel facility in Pennsylvania—an intentional backdrop underscoring his administration’s industrial nationalism ahead of the 2026 midterm elections. On his social platform, Truth Social, he emphasized the importance of reviving the U.S. steel and aluminum industries, linking tariff increases to national security and economic independence.

The move is not entirely unprecedented, as the Trump administration had already implemented a base 10% tariff on a broad array of imports earlier in April. What distinguishes the latest escalation is the swiftness of its enforcement and the scale of its coverage, which risks disrupting a wide range of global supply chains in construction, automotive, aerospace, and manufacturing sectors.

Global Reaction and Rising Risk of Retaliation

The European Union responded immediately, warning that it has prepared retaliatory measures should negotiations fail. EU officials argue that such unilateral increases violate World Trade Organization norms and risk undermining fragile recovery efforts in the global economy. Over the past weekend, the EU Trade Commissioner publicly stated that they were reviewing countermeasures, including potential duties on American agricultural and industrial goods.

Other major trading partners are watching closely. Many are currently engaged in fast-tracked negotiations with the U.S. after the broader 10% tariff was announced in April. These discussions now take on a greater sense of urgency, as several countries hope to avoid being targeted by the July implementation deadline for retaliatory tariffs.

Implications for Markets and Trade Dynamics

Economically, this tariff escalation could drive up costs for U.S.-based manufacturers that rely on imported raw materials, potentially feeding into consumer price inflation—a concern already highlighted by some members of the Federal Reserve. At the same time, the possibility of a global tit-for-tat trade war remains high. If retaliation materializes, particularly from the EU, India, or Japan, it may affect U.S. exports in sectors ranging from agriculture to electronics.

Strategically, Trump’s tariff move reinforces his administration’s broader goal of industrial reshoring and domestic capacity building. But in the short term, it introduces volatility into trade negotiations and global supply networks, further complicating efforts to stabilize prices and foster cross-border cooperation.

While the new 50% tariff may provide symbolic and short-term political benefits for the U.S. steel and aluminum sectors, the long-term implications are more complex. The heightened risk of retaliation, rising input costs, and diplomatic strain could erode U.S. competitiveness in downstream industries. As negotiations intensify in the coming weeks, much will depend on whether trade partners can reach exemptions or reciprocal agreements—or whether the global economy will be drawn deeper into a new era of protectionism.