GBP/USD Price Forecast: Seems vulnerable as weak UK jobs data lifts March BoE rate cut bets

The GBP/USD pair drifts lower for the second straight day on Tuesday and drops to over a one-week low, around mid-1.3500s, during the early European session following the release of the UK jobs report. The Office for National Statistics (ONS) reported that the  ILO UK Unemployment Rate climbed to 5.2% in the three months to December, from 5.1% the prior month, marking the highest level since early 2021. Additional details showed that the number of people claiming jobless benefits rose to 28.8K in January, pointing to continued softening in the UK labour market at the start of 2026.

Furthermore, the rate of annual wage growth also moderated during the reported period, dropping to its lowest level in almost four years. In fact, Average Earnings Excluding Bonus  increased 4.2% in the three months ended December, down from 4.6% in the previous quarter, while the gauge including bonuses slowed to 4.2% from the former reading of 4.6%. Barring any surprises from the UK consumer inflation figures, due for release on Wednesday, the latest employment details reaffirm bets for a March interest rate cut by the Bank of England (BoE) and weigh on the British Pound (GBP).

The US Dollar (USD), on the other hand, climbs to over a one-week high and turns out to be another factor exerting downward pressure on the GBP/USD pair. The USD, however, lacks bullish conviction amid dovish Federal Reserve (Fed) expectations. In fact, traders ramped up their bets that the US central bank will lower borrowing costs in June following the release of softer US consumer inflation figures last Friday. Moreover, the current market pricing indicates a higher possibility of at least two rate cuts in 2026, which, along with threats to the Fed's independence, caps the upside for the USD.

Traders also seem reluctant and opt to wait for more cues about the Fed's rate-cut path before placing fresh directional bets. Hence, the focus will remain on FOMC Minutes and the crucial US Personal Consumption Expenditure (PCE) Price Index, due for release on Wednesday and Friday, respectively. The Fed's policy outlook, in turn, will play a key role in influencing the USD price dynamics. Apart from this, the UK Consumer Price Index (CPI) report on Wednesday might infuse some volatility and provide some meaningful impetus to the GBP/USD pair during the latter part of the week.

GBP/USD 4-hour chart

Technical Analysis:

The GBP/USD pair once again finds some support near the 200-period Simple Moving Average (SMA) on the 4-hour chart, near the 1.3550 region, which should now act as a key pivotal point for short-term traders. The Moving Average Convergence Divergence (MACD) histogram remains negative, indicating the MACD line sits below the Signal line near the zero mark. The RSI prints 40 (neutral-to-bearish) after rebounding from earlier lows, suggesting upside attempts could remain fragile.

Holding above the rising 200-period SMA would preserve a supportive near-term bias, while a close back below it would hand the initiative to sellers. A shift of the MACD histogram into positive territory would hint at fading bearish pressure. The RSI needs to reclaim 50 to bolster recovery prospects; staying sub-50 would keep rallies capped and leave the focus on base-building rather than extension higher.

(The technical analysis of this story was written with the help of an AI tool.)