Pound steadies as markets await key US data

The GBP/USD pair found stability on Friday, trading around 1.3453 as anxiety in the debt markets eased. Investor attention has shifted firmly to the upcoming US Nonfarm Payrolls report, with softer US labour data reinforcing expectations of a Federal Reserve rate cut by year-end.

The latest ADP employment report showed the US economy added just 54,000 jobs in August, well below the forecast of 65,000 and July’s figure of 104,000. The dollar faced additional headwinds from a decline in job openings, which fell to their lowest level since September 2024, and a rise in unemployment claims to a two-month high.

Domestically, the pound remains sensitive to uncertainty surrounding the autumn budget, due in November. Market participants also noted remarks from Bank of England Governor Andrew Bailey, who emphasised “significant uncertainty” regarding the timing of interest rate cuts in the UK.

Interest rate futures currently imply no further policy changes this year, with the first cut not fully priced in until April.

Technical analysis: GBP/USD

One-hour chart

On the H4 chart, GBP/USD has completed an upward wave to 1.3460. The pair may now extend this movement towards the resistance level at 1.3548. Following a corrective phase, a rebound from this resistance could trigger a new downward wave, with initial support expected at 1.3420 and further downside potential toward 1.3340. This view is supported by the MACD indicator: both the histogram and signal line remain below zero but are rising.

One-hour chart

On the H1 chart, the pair tested 1.3460 and continues its corrective advance. The near-term upside target remains the 1.3548 resistance level. A rejection at this level could signal a resumption of the broader downtrend. The Stochastic oscillator corroborates this outlook, with its signal line hovering near 80.0 – indicating overbought conditions and a potential reversal.

Conclusion

The pound has paused its decline amid calmer debt markets and a weaker dollar, though domestic fiscal and monetary uncertainties linger. Technically, the pair shows potential for limited near-term gains followed by a bearish reversal. All eyes now turn to the US NFP report for clearer directional cues.