GBP/USD drifts lower heading into NFP range
- The Pound Sterling is stuck near three-month lows as the OBR downgrades growth and surging Crude Oil prices cloud the BoE's March rate path.
- The OBR cut its 2026 UK growth forecast to 1.1% from 1.4% in the Spring Statement, while markets have slashed the probability of a March BoE rate cut to around 20% from 75% a week ago as rising energy costs reshape the inflation outlook.
- Friday's US NFP report is forecast at around 60K for February, a sharp slowdown from January's 130K, and could set the tone for GBP/USD heading into the BoE's March 19 decision.
GBP/USD edged lower by 0.2% on Thursday, settling close to 1.3350 in a strained trading session that kept the pair pinned near three-month lows. Price briefly recovered earlier in the day on reports that Iran had indirectly signaled openness to talks with the CIA, but the bounce faded as Israeli officials reportedly advised Washington to disregard the overture. The pair is now congesting in a tight range around its key daily moving averages, with small-bodied candles over the past three sessions pointing to indecision after the sharp sell-off from the late-January high near 1.3870.
Chancellor Rachel Reeves delivered the Spring Statement on Wednesday, with the Office for Budget Responsibility (OBR) cutting its 2026 UK growth forecast to 1.1% from 1.4% in November. The OBR noted that the Middle East conflict, which escalated as the document was being finalized, "could have very significant impacts on the global and UK economies." The unemployment rate is now expected to peak at 5.3% later this year, well above the previous 4.9% forecast. The Bank of England (BoE) held rates at 3.75% in February by a narrow 5-4 vote, and surging Crude Oil prices on the Strait of Hormuz shutdown has dramatically shifted rate expectations: markets now price only a 20% chance of a cut at the BoE's March 19 meeting, down from roughly 75% a week ago, with just a single 25 basis point reduction expected for the full year.
On the US Dollar (USD) side, Federal Reserve (Fed) officials continue to ogle the possibility of raising rates if inflation stays above target, to the dismay of key policymakers who insist the time to cut is now. All eyes turn to Friday's Non-farm Payrolls (NFP) report, where consensus sits around 60K for February after January's above-trend 130K. A soft reading could revive rate-cut expectations and offer Sterling some relief, while a stronger number would reinforce the Fed's hawkish lean and likely push GBP/USD toward a fresh test of support below current levels.
GBP/USD daily chart
Technical Analysis
In the daily chart, GBP/USD trades at 1.3351. The near-term bias is mildly bearish as spot holds below the declining 50-day EMA near 1.35 while still hovering just above the flatter 200-day EMA around 1.34, highlighting a softening but not yet broken broader uptrend. Price has been grinding lower from the mid-1.38s, and the inability to reclaim the 50-day line keeps sellers in control on rallies. The Stochastic oscillator holds in the lower half of its range after recovering from oversold territory, which points to waning downside momentum but does not yet signal a convincing bullish reversal.
Immediate resistance emerges at the 1.3400–1.3500 area, where the 200-day EMA at 1.34 and the 50-day EMA slightly below 1.35 converge, and a daily close above this zone would be needed to ease current downside pressure and open a move back towards 1.36. On the downside, initial support is at the recent low near 1.3360, followed by 1.3300, where a break would confirm a deeper corrective phase and expose the next bearish target toward 1.32. As long as price trades beneath the 50-day EMA, rallies into the mid-1.34s are likely to attract selling interest.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
