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GBP/USD pulls back as risk-off mood drives Monday decline

  • The BoE held rates in an 8-1 vote last week, with some policymakers signalling openness to hikes at the next meeting.
  • A bare UK economic calendar this week leaves Sterling exposed to broader risk sentiment after Thursday's BoE decision.
  • Friday's US NFP looms as the key Dollar catalyst, with markets bracing for a sharp jobs slowdown to 60K from 178K.

GBP/USD declined around 0.35% on Monday, settling near 1.3530 after a sharp rejection from the 1.3600 handle dragged the pair lower through choppy afternoon trade. Price had peaked above 1.3650 during Friday's NY session, but Monday's broad-based drift carved a session low close to 1.3510 as last week's bullish momentum waned.

On the Pound side, last week's Bank of England (BoE) decision saw the Monetary Policy Committee (MPC) vote 8-1 to hold the Bank Rate at 3.75%, with Chief Economist Huw Pill the lone dissenter in favour of a 25 basis point hike. Four other MPC members signalled openness to hikes at upcoming meetings if energy shocks intensify, keeping crude oil dynamics central to the policy outlook. The UK economic calendar is notably bare this week, leaving Cable exposed to broader risk sentiment and US Dollar flows in the absence of domestic catalysts.

For the US Dollar, the week's main event is Friday's Non-Farm Payrolls (NFP) print, where consensus pencils in just 60K jobs added against the prior 178K reading and the unemployment rate seen holding at 4.3%. Earlier in the week, Tuesday's Institute for Supply Management (ISM) Services PMI and JOLTS Job Openings, alongside Wednesday's ADP private payrolls release, will provide preliminary signals on the labour market. A soft headline payroll print could weigh on the Dollar and lend Cable some support in the absence of UK catalysts.


GBP/USD 15-minute chart

Chart Analysis GBP/USD

Technical Analysis

In the fifteen-minute chart, GBP/USD trades at 1.3532. The pair holds a bearish intraday bias as it trades below the day’s open at 1.3582, indicating sustained selling pressure from the European session. The Stochastic RSI has retreated from overbought to mid-range readings near 47, hinting that downside momentum is moderating but not yet suggesting a decisive bullish reversal.

On the topside, the day’s open at 1.3582 acts as the first notable resistance, and a recovery above this level would be needed to ease immediate downside pressure and open the way for a deeper corrective bounce. With no clear nearby technical supports from moving averages or other levels in the dataset, any fresh lows below the current price would leave the pair vulnerable to further extension lower until a new demand zone is established on the chart.

In the daily chart, GBP/USD trades at 1.3532. The pair maintains a constructive bias as spot holds above both the 50-day exponential moving average (EMA) at 1.3456 and the 200-day EMA at 1.3367, keeping the broader uptrend supported despite the recent consolidation. The Stochastic RSI has retreated toward the mid-range near 49, hinting that upside momentum is cooling but not yet reversing, which suggests scope for continued range-bound gains while price stays anchored above these key averages.

On the downside, initial support emerges at the 50-day EMA around 1.3456, with the 200-day EMA at 1.3367 reinforcing a deeper but still constructive demand zone if sellers press lower. With no immediate overhead technical barriers highlighted by the current moving-average setup, bulls may retain control in the near term, but a decisive drop below 1.3367 would undermine the positive structure and expose a more pronounced corrective phase.

(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

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.

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