FTSE 100 Edges Higher While Sterling Hits $1.3367 After Disappointing U.S. Jobs Report
Key Points
FTSE 100 closed up 174 points at 10,652 after a weak U.S. jobs report.
U.S. payrolls rose just 57,000 in June, far below the 110,000 forecast.
Sterling climbed to $1.3349 as dollar weakness followed reduced Fed rate hike odds.
BAE Systems and Babcock led gains, both rising more than 6% on Thursday.
FTSE 100 jumped 174 points to close at 10,652 on Thursday, July 2, 2026. The rally followed a weaker-than-expected U.S. jobs report, which rattled dollar strength. Nonfarm payrolls rose just 57,000 in June, far below the 110,000 consensus estimate. Sterling climbed 0.52% to $1.3349 against the dollar. The FTSE 100 posted its highest close since the Iran war began, marking its second 200-plus point session this year.
US Jobs Miss Reshapes Rate Expectations
The June jobs report showed cooling momentum across the U.S. labor market. Unemployment fell slightly to 4.2% from 4.3%, while prior months saw downward revisions. April was cut to 148,000 and May to 129,000 jobs. This softer data reduced expectations for a Fed rate hike later in 2026, boosting equities globally.
Federal Reserve Rate Path in Focus
The Federal Reserve held rates steady at 3.50% to 3.75% in June. Markets had priced a 50.7% chance of a September hike before Thursday’s data landed. ING now expects a prolonged Fed pause rather than any 2026 rate increase, a shift that lifted risk appetite across UK and European equities.
Defence and Aerospace Stocks Lead FTSE 100 Gains
BAE Systems and Babcock both rose more than 6%, topping the FTSE 100 leaderboard. Aerospace names Melrose and Rolls-Royce also advanced during Thursday’s session. Defensive heavyweights including AstraZeneca, GSK, Tesco, and Haleon posted strong moves too, reflecting broad-based buying rather than a narrow sector rally.
Sterling Strength Adds Currency Context
GBP/USD climbed toward $1.3349, its strongest level in roughly two weeks. The euro also gained 0.49% against the dollar, trading above $1.1434. Bank of England Governor Andrew Bailey struck a dovish tone at Sintra, flagging a softening UK economy while ruling out any imminent rate cuts.
Commodities and Global Markets React
Gold (NYSE: GOLD) jumped 2.1% to $4,118 an ounce as the weaker dollar boosted demand for safe-haven assets. Brent crude fell 1.2% to $70.74 a barrel, its lowest level since late February. Germany’s DAX surged 2.3% to a fresh six-month high, slightly outpacing the FTSE 100’s 1.7% gain on the same day.
Key numbers behind Thursday’s FTSE 100 rally:
- FTSE 100 close: 10,652, up 174 points (about 1.7%)
- US nonfarm payrolls: 57,000 added, versus 110,000 expected
- Sterling: $1.3349, up 0.52% against the dollar
- Gold: $4,118 an ounce, up 2.1% on the day
Final Thoughts
The FTSE 100’s rally reflects how sensitive global equities remain to U.S. labor data and Fed policy signals. Defence and aerospace stocks like BAE Systems and Rolls-Royce led gains, while sterling strength added a favorable currency backdrop. With markets now pricing a longer Fed pause, investors will watch upcoming inflation data closely for confirmation of this shift.
Disclaimer:
Stock markets involve risks. This content is for informational purposes only. Analyst ratings are opinions and not guarantees of future performance. Past performance does not guarantee future results. Meyka AI PTY LTD provides market analysis and data insights, not financial advice. Always conduct your own research and consider consulting a licensed financial advisor.
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