GBP/USD Weekly Forecast: Will Pound Sterling defend key 1.3450 support ahead of US jobs data?
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UPGRADE- Pound Sterling settled modestly flat against the US Dollar, confined to a tight range.
- GBP/USD looks to a US data-filled week for a fresh directional impetus.
- GBP/USD held the fort above the 200-day SMA, 78.6% Fibo confluence support amid bearish daily RSI.
The Pound Sterling (GBP) entered a bearish consolidation phase against the US Dollar (USD), after having tested critical support near the 1.3450 level on several occasions.
Pound Sterling put up a lacklustre show
GBP/USD hovered close to the monthly lows of 1.3434 reached a week ago, closing almost unchanged on a weekly basis. The listless performance in the major could be attributed to the USD’s subdued trading action and a largely risk-averse market environment.
Despite lingering geopolitical risks surrounding the United States (US) and Iran over the nuclear program, the Greenback failed to capitalize on the safe-haven flows as US President Donald Trump’s erratic trade policy outweighed those concerns.
The US Supreme Court last Friday rejected Trump’s emergency tariffs, prompting the President to announce a new 10% rate on the rest of the world, only to then lift it to 15%. The move rekindled market concerns over a highly uncertain and volatile environment, acting as a headwind for the US assets, including the USD.
US Trade Representative Jamieson Greer said on Wednesday that the US tariff rate for some countries will rise to 15% or higher from the newly imposed 10%, without revealing any further specific details.
On the US-Iran geopolitical development, Oman's Foreign Minister, who was also involved in the third round of Geneva talks on Thursday, noted: "We have concluded the day with significant progress in the negotiations between the United States and Iran. We will resume them soon, after consultations in the respective capitals. Technical-level talks will take place next week.”
A lack of breakthrough in the nuclear talks kept the door open for an American strike on Tehran in the coming days, undermining risk sentiment and the high-beta currency, the Pound Sterling.
The British Pound also faced headwinds from increased expectations that the Bank of England (BoE) will lower interest rates as early as May, against the odds for a Fed rate cut in the second half of the year.
“During his testimony before the Parliament’s Treasury Committee earlier this week, BoE Governor Andrew Bailey signaled that there is scope for rate cuts amid the expectation that inflation will return to the 2% target,” FXStreet’s Analyst Haresh Menghani said.
Additionally, the UK political drama also cast a dark cloud on the pair’s outlook going forward. Amid allegations of illegal voting and a tight contest between Labour, Reform UK, and the Green Party candidates, the Green Party won the Gorton and Denton by-election on Friday - their first ever Westminster by-election win. The UK Prime Minister Keir Starmer’s Labour Party suffered an embarrassing election defeat.
The US Bureau of Labor Statistics reported on Friday that Producer inflation in the US, as measured by the change in the Producer Price Index (PPI), declined to 2.9% on a yearly basis in January from 3% in December. This reading came in above the market expectation of 2.6%. On a monthly basis, the PPI rose 0.5% following the 0.4% increase (revised from 0.5%) recorded in December. The USD held its ground heading into the weekend and didn't allow GBP/USD to gain traction.
Top-tier US jobs data to stand out
Another data-light week in the United Kingdom (UK), and hence, all eyes will remain on the US docket, with employment data due to trickle in from Wednesday.
On Monday, the US ISM Manufacturing PMI data will be reported, while a couple of BoE policymakers are scheduled to speak.
The UK government is set to publish its Annual Budget report on Tuesday as the US calendar remains data dry.
Wednesday will feature the US ADP monthly Employment Change report, followed by the US ISM Services PMI data.
The weekly Jobless Claims from the US will be released on Thursday, alongside the quarterly preliminary Unit Labor Costs Index.
The all-important US labor market report will be released on Friday. The headline Nonfarm Payrolls (NFP) figure and the Unemployment Rate will be closely scrutinized for gauging the health of the US jobs market and future Fed rate cuts. The data will rock the USD, heavily influencing the GBP/USD pair.
Apart from the statistics and central bank talks, the US-Iran negotiations on the nuclear deal will be awaited in the upcoming week.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3450. Bias turns cautiously bearish as spot slips below the 20-day Simple Moving Average (SMA) at 1.36 while still holding above the rising 100- and 200-day SMAs, hinting at a corrective phase within a broader uptrend. The recent pullback from the 1.38 area aligns with a fading momentum profile, with the Relative Strength Index (RSI) easing to 41 and holding below the 50 midline, reinforcing building downside pressure rather than oversold conditions. The nearer Fibonacci retracement measured from the 1.3348 low to the 1.3862 high shows price now beneath the 38.2% retracement at 1.3666 and pressing towards deeper retracement territory, consistent with sellers regaining the near-term initiative.
Immediate resistance emerges at the 50.0% retracement of the 1.3348–1.3862 rally at 1.3605, with the 38.2% retracement at 1.3666 above it, where the 20-day SMA convergence would form a cap if rebounds extend. A sustained break back above 1.3666 would soften the bearish tone and open the way for a re-test of the 23.6% retracement at 1.3741. On the downside, initial support sits near the 200-day SMA around 1.3450, followed by the 100-day SMA close to 1.34, where the longer-term trend base aligns. A clear drop through this moving-average zone would expose the prior swing low at 1.3348, turning the broader structure into a more decisive medium-term decline.
(The technical analysis of this story was written with the help of an AI tool.)
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- Pound Sterling settled modestly flat against the US Dollar, confined to a tight range.
- GBP/USD looks to a US data-filled week for a fresh directional impetus.
- GBP/USD held the fort above the 200-day SMA, 78.6% Fibo confluence support amid bearish daily RSI.
The Pound Sterling (GBP) entered a bearish consolidation phase against the US Dollar (USD), after having tested critical support near the 1.3450 level on several occasions.
Pound Sterling put up a lacklustre show
GBP/USD hovered close to the monthly lows of 1.3434 reached a week ago, closing almost unchanged on a weekly basis. The listless performance in the major could be attributed to the USD’s subdued trading action and a largely risk-averse market environment.
Despite lingering geopolitical risks surrounding the United States (US) and Iran over the nuclear program, the Greenback failed to capitalize on the safe-haven flows as US President Donald Trump’s erratic trade policy outweighed those concerns.
The US Supreme Court last Friday rejected Trump’s emergency tariffs, prompting the President to announce a new 10% rate on the rest of the world, only to then lift it to 15%. The move rekindled market concerns over a highly uncertain and volatile environment, acting as a headwind for the US assets, including the USD.
US Trade Representative Jamieson Greer said on Wednesday that the US tariff rate for some countries will rise to 15% or higher from the newly imposed 10%, without revealing any further specific details.
On the US-Iran geopolitical development, Oman's Foreign Minister, who was also involved in the third round of Geneva talks on Thursday, noted: "We have concluded the day with significant progress in the negotiations between the United States and Iran. We will resume them soon, after consultations in the respective capitals. Technical-level talks will take place next week.”
A lack of breakthrough in the nuclear talks kept the door open for an American strike on Tehran in the coming days, undermining risk sentiment and the high-beta currency, the Pound Sterling.
The British Pound also faced headwinds from increased expectations that the Bank of England (BoE) will lower interest rates as early as May, against the odds for a Fed rate cut in the second half of the year.
“During his testimony before the Parliament’s Treasury Committee earlier this week, BoE Governor Andrew Bailey signaled that there is scope for rate cuts amid the expectation that inflation will return to the 2% target,” FXStreet’s Analyst Haresh Menghani said.
Additionally, the UK political drama also cast a dark cloud on the pair’s outlook going forward. Amid allegations of illegal voting and a tight contest between Labour, Reform UK, and the Green Party candidates, the Green Party won the Gorton and Denton by-election on Friday - their first ever Westminster by-election win. The UK Prime Minister Keir Starmer’s Labour Party suffered an embarrassing election defeat.
The US Bureau of Labor Statistics reported on Friday that Producer inflation in the US, as measured by the change in the Producer Price Index (PPI), declined to 2.9% on a yearly basis in January from 3% in December. This reading came in above the market expectation of 2.6%. On a monthly basis, the PPI rose 0.5% following the 0.4% increase (revised from 0.5%) recorded in December. The USD held its ground heading into the weekend and didn't allow GBP/USD to gain traction.
Top-tier US jobs data to stand out
Another data-light week in the United Kingdom (UK), and hence, all eyes will remain on the US docket, with employment data due to trickle in from Wednesday.
On Monday, the US ISM Manufacturing PMI data will be reported, while a couple of BoE policymakers are scheduled to speak.
The UK government is set to publish its Annual Budget report on Tuesday as the US calendar remains data dry.
Wednesday will feature the US ADP monthly Employment Change report, followed by the US ISM Services PMI data.
The weekly Jobless Claims from the US will be released on Thursday, alongside the quarterly preliminary Unit Labor Costs Index.
The all-important US labor market report will be released on Friday. The headline Nonfarm Payrolls (NFP) figure and the Unemployment Rate will be closely scrutinized for gauging the health of the US jobs market and future Fed rate cuts. The data will rock the USD, heavily influencing the GBP/USD pair.
Apart from the statistics and central bank talks, the US-Iran negotiations on the nuclear deal will be awaited in the upcoming week.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3450. Bias turns cautiously bearish as spot slips below the 20-day Simple Moving Average (SMA) at 1.36 while still holding above the rising 100- and 200-day SMAs, hinting at a corrective phase within a broader uptrend. The recent pullback from the 1.38 area aligns with a fading momentum profile, with the Relative Strength Index (RSI) easing to 41 and holding below the 50 midline, reinforcing building downside pressure rather than oversold conditions. The nearer Fibonacci retracement measured from the 1.3348 low to the 1.3862 high shows price now beneath the 38.2% retracement at 1.3666 and pressing towards deeper retracement territory, consistent with sellers regaining the near-term initiative.
Immediate resistance emerges at the 50.0% retracement of the 1.3348–1.3862 rally at 1.3605, with the 38.2% retracement at 1.3666 above it, where the 20-day SMA convergence would form a cap if rebounds extend. A sustained break back above 1.3666 would soften the bearish tone and open the way for a re-test of the 23.6% retracement at 1.3741. On the downside, initial support sits near the 200-day SMA around 1.3450, followed by the 100-day SMA close to 1.34, where the longer-term trend base aligns. A clear drop through this moving-average zone would expose the prior swing low at 1.3348, turning the broader structure into a more decisive medium-term decline.
(The technical analysis of this story was written with the help of an AI tool.)
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
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