GBP/USD Forecast: Pound powerless against Powell, Nonfarm Payrolls could deliver extra punch

GBP/USD has been falling sharply after the Fed's Powell shrugged off rising bond yields.
US Nonfarm Payrolls are set to rock markets, brushing aside UK developments.
Friday's four-hour chart shows bears may gain even more ground.

Yohay Elam FXStreet

Britain's new budget has been well received by investors and the country's vaccination campaign is hailed as a success – but nothing can match the Federal Reserve's firepower. That is especially true when the world's most powerful central refuses to budge.

Jerome Powell, Chairman of the Federal Reserve, said that the rapid rise in bond yields has "caught my attention" – but nothing else. Otherwise, he stuck to the script of dismissing prospects of rising inflation, saying that the Fed eyes various measures of financial conditions and stressing that ten million Americans remain out of work.

See Powell Analysis: Markets set to suffer for two more weeks as Fed mostly dismissed bond rout

The reaction in markets is since felt in full force – US ten-year Treasury yields have soared above 1.55%, carrying the dollar higher. GBP/USD dropped toward 1.38 and the bottom seems out of sight.

While markets continue digesting Powell's reluctance to help, they will have to quickly shift to the Nonfarm Payrolls. The economic calendar is pointing to an increase of 182,000 positions in February, while several leading indicators such as ADP's labor figures and the ISM Services Purchasing Managers' Index point to even lower results. That means a minor beat would be sufficient to boost the greenback even further.

In the meantime, the Senate continues discussing President Joe Biden's now-modified covid relief package. While the total bill will fall short of $1.9 trillion, it would serve as a boost to the economy.

The pound remains supported via the vaccination campaign – nearing a third of all Brits – and the upbeat forecasts in the budget. However, while sterling has room to rise against many other currencies, it seems powerless against the dollar.

GBP/USD Technical Analysis

Pound/dollar is suffering from downside momentum on the four-hour chart and has fallen below the 200 Simple Moving Average. Moreover, the Relative Strength Index is still above 30, thus outside oversold conditions.

Some support awaits at the daily low of 1.3810, and then at 1.3775 and 1.3750, lines that were in play earlier in the year. The downside target is 1.3680.

Resistance awaits at 1.3860, followed by 1.3880 and 1.3930.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD flirts with weekly highs in the Fed's aftermath

GBP/USD reversed early losses following the Federal Reserve decision to keep rates on hold and neared the 1.3360 level before shedding some ground. Focus shifts to Governor Kevin Warsh's speech, while the Bank of England will announce its monetary policy decision on Thursday.

EUR/USD extends rally pass 1.1450 on Fed's Warsh

EUR/USD trades at fresh weekly highs above 1.1450, following the Federal Reserve monetary policy decision to keep interest rates on hold. The statement showed policymakers remain confident in economic progress while blaming inflation on energy prices. The divided vote among officials put in doubt a September hike, leading to sharp US Dollar losses.

Gold hovers around $4,100 as Fed decision hits the USD

Gold surged following the Federal Reserve's decision to keep the benchmark interest rate unchanged at 3.50%-3.75%. Policymakers noted that inflation remains elevated and that economic activity is expanding at a solid pace despite elevated uncertainty, spurring doubts about a rate hike in September. XAU/USD peaked above $4,100, now battling to retain the level.

No soft target: Warsh vows to return inflation to 2%

The Fed left interest rates unchanged at 3.50%-3.75%, but the decision carried a distinctly hawkish edge as three officials voted for an immediate 25-basis-point increase. Chair Kevin Warsh reinforced that message, insisting there was no tolerance for a softer inflation target and warning that the Fed would not hesitate to act.

How the CLARITY Act unlocks Wall Street’s tokenization pipeline

The United States (US) Digital Asset Market Clarity Act (CLARITY Act), awaiting a full Senate floor vote, promises to unlock Wall Street’s potential to tokenize financial assets, including equities, US Treasuries, private credit, real estate and commodities at a scale that could supercharge the real-world asset (RWA) market from the current $17 billion level to $5.5 trillion by 2030, according to

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.