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GBP/USD Falls Before UK Labor Market Figures: Most Important Factors Contributing to the Market Decline

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  • February 18, 2025
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GBP/USD has fallen around 1.2600 before important UK labor market figures, ending its five-day streak of gains. Traders expect an increase in unemployment and claimant count, which may weigh on the British Pound. UK PM Keir Starmer’s demand for a “US backstop” in a Ukraine peace agreement also brings geopolitical uncertainty. On the American side, the Dollar rallies on increasing Treasury yields and dovish Fed comments, with policymakers reiterating that inflation threats remain. From a technical point of view, GBP/USD is approaching major support at 1.2600, with additional selling potential if numbers are disappointing. Investors are closely watching UK job data and Fed policy cues for the next move. KEY LOOKOUTS • UK labor figures are awaited by traders, as the unemployment rate is predicted to increase to 4.5%, influencing GBP/USD. • UK PM Keir Starmer demands any peace agreement for Ukraine should come with a “US backstop” to prevent future Russian incursions. • Higher US Treasury yields and hawkish tone of Fed policymakers maintain the US Dollar strong, exerting pressure on GBP/USD. • Fed Governor Michelle Bowman cautions against ongoing inflation risks, proposing additional data should be seen before cuts in interest rates. GBP/USD comes under selling pressure, falling around 1.2600 as market participants look forward to pivotal UK labor market information. The anticipated increase in unemployment and claimant count might act as a drag on the British Pound. In the meantime, UK Prime Minister Keir Starmer stressed the importance of a “US backstop” in any peace deal for Ukraine to discourage further Russian aggression. Conversely, the US Dollar strengthens as Treasury yields rise, buoyed by dovish comments from Fed officials. Fed Governor Michelle Bowman cautioned that inflation risks remain, indicating that more clarity is required before rate cuts can be considered. These together form the near-term direction for GBP/USD. GBP/USD falls close to 1.2600 as markets await UK labor figures, where unemployment is anticipated to increase. Meanwhile, the US Dollar firm up due to higher Treasury yields and dovish stance of Fed officials regarding inflation. UK PM Keir Starmer’s demand for a “US backstop” in peace negotiations for Ukraine brings in geopolitical risk. • The duo falls to around 1.2600 prior to the highly important UK labor market numbers, snapping its five-day success run. • The jobless rate is expected to climb to 4.5%, while the claimant count should increase by 10K, which will influence GBP sentiment. • UK PM Keir Starmer emphasizes that any peace agreement for Ukraine must be accompanied by a “US backstop” to prevent Russian aggression in the future. • The US Dollar Index (DXY) bounces back on the back of surging Treasury yields and hawkish Fed comments, putting pressure on GBP/USD. • Fed Governor Michelle Bowman reiterates ongoing inflation threats, emphasizing added clarity is necessary before rate cuts are on the cards. • Investors hold back following Fed Governor Waller’s concession of slower inflation gains, adding to doubt on monetary policy action. • Geopolitical tensions and economic uncertainty propel GBP/USD volatility, and investors are focusing intently on forthcoming data announcements. GBP/USD has declined close to 1.2600 prior to the release of UK labor market data, bringing an end to its five consecutive days of advances. Investors closely observe the job numbers, which are anticipated to increase the unemployment rate to 4.5% and to grow the claimant count by 10K. A weaker-than-expected labor market could weigh further on the British Pound, adding to its recent decline. Meanwhile, UK Prime Minister Keir Starmer emphasized the need for a “US backstop” in any Ukraine peace deal to prevent future Russian aggression, adding a geopolitical dimension to market sentiment.  GBP/USD Daily Price Chart TradingView Prepared by ELLYANA On the American side, the Dollar is strengthening on the back of rising Treasury yields and cautious comments from Federal Reserve officials. The US Dollar Index (DXY) has risen after three consecutive days of decline as 2-year and 10-year Treasury yields are at 4.27% and 4.51%, respectively. Fed Governor Michelle Bowman has cautioned that inflation risks are still high and cautioned against moves to cut rates before more clarity is evident. In the same vein, Fed Governor Christopher Waller recognized sluggish progress in curbing inflation, cementing doubt about future policy action. All these factors combined point to GBP/USD’s bearish risk as investors wait for crucial economic indicators. TECHNICAL ANALYSIS GBP/USD is confronted with short-term support around the 1.2600 psychological mark, with a further drop possibly challenging the 1.2570 and 1.2530 support levels. A fall below these levels may create room for a more significant pullback to 1.2500. On the positive side, resistance is observed at 1.2650, followed by the recent high at 1.2700. The Relative Strength Index (RSI) is also turning down, reflecting bearish momentum, while the 50-day moving average at 1.2620 may serve as a dynamic resistance. Traders will be observing if GBP/USD can maintain above crucial support levels or continue its downside move in the face of fundamental pressures.  FORECAST If the UK labor market data surprises positively, showing resilience in employment figures, GBP/USD could regain strength. A better-than-expected jobs report might boost investor confidence in the British economy, pushing the pair towards the 1.2650 resistance level. If buying momentum continues, the next upside target would be 1.2700, followed by 1.2750, where significant resistance lies. Also, any dovish indications from the Federal Reserve for upcoming rate cuts may bring down the US Dollar, which will help propel a GBP/USD recovery. Conversely, if UK jobs data fail to impress with rising unemployment and an increased claimant count, GBP/USD may witness selling pressure. A fall below the important 1.2600 support could see further declines towards 1.2570 and 1.2530. Further, a more hawkish US Dollar, fueled by Fed hawkish commentary and an increase in Treasury yields, may hasten the losses. Should bearish pressure continue, GBP/USD might fall to the 1.2500 psychological support, testing 1.2450 in a protracted downtrend.

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Currencies GBP/USD

GBP/USD Struggles Below 50-Day SMA: Vulnerable to Further Decline Amid USD Strength

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  • February 10, 2025
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GBP/USD maintains its weakness near the 1.2400 level, with the pair still unable to gain intraday ground as the US Dollar continues its strength. The currency pair is under headwinds as the Federal Reserve and the Bank of England diverge in their outlooks. The Fed will likely keep rates steady due to strong US employment data and growing inflation concerns as a result of Trump’s tariff policies. Technically, repeated failures near the 50-day SMA suggest a bearish bias, and the downside risks are increasing below the 1.2375 support. Any rebound towards 1.2500 may face selling pressure, while a breakdown below 1.2300 could accelerate losses toward mid-1.2200s and beyond. KEY LOOKOUTS • The 1.2500 psychological level remains a strong resistance; a decisive breakout could trigger further gains toward 1.2575-1.2600 in the near term. • Persistent failures near the 50-day SMA indicate a bearish trend, suggesting that any upside attempt may face strong resistance and selling pressure. • The GBP/USD is still limited from a meaningful recovery and a decline in its downward movements as a stronger US Dollar continues, spurred by the threat of Trump’s tariffs and Fed’s stable rate stance. • A convincing breakdown below the support zone 1.2375-1.2370 would accelerate losses toward the 1.2300 round number and further below mid-1.2200s. The GBP/USD remains vulnerable and struggles to hold ground above 1.2400, as the bearish pressure mounts below the 50-day SMA. A stronger US Dollar, given the tariff policies of Trump and the steady rate outlook from the Fed, is limiting any meaningful upside. The key resistance at 1.2500 remains a ceiling, and thus an important level to be reclaimed by bulls. The downside is potentially accelerated toward the 1.2300 mark if a support zone around 1.2375 is breached, with additional downside potential stretching into mid-1.2200s. Traders are looking for a major US economic data and BoE policy signals flow to catch fresh momentum. GBP/USD is suffering below the 50-day SMA, with 1.2500 acting as a strong resistance bar; if it breaks below 1.2375, another fall towards 1.2300 can be expected. US Dollars are gaining across Fed policies and due to Trump’s continued toughness on tariffs, making the pair vulnerable. • Repeated failures near the 50-day SMA indicate a bearish bias, keeping the pair vulnerable to further declines. • Any rebound faces strong resistance at 1.2500; a breakout above this level could signal a potential trend reversal. • A decisive break below this key support zone may accelerate losses toward 1.2300 and mid-1.2200s. • The USD remains strong due to Fed’s rate outlook and Trump’s tariff policies, limiting GBP/USD upside potential. • The economy growth warning from the Bank of England is a major factor continuously straining the GBP with higher downside risks. • Additional strength in US employment and inflation concerns can further help support the Dollar and weigh on the GBP/USD. • Global risk appetite, geopolitical news, and various economic data are likely to drive the next move of the GBP/USD pair. The GBP/USD remains in selling pressures, as it fails to break above the 50-day simple moving average, which forms a very strong resistance. Now, the psychological level of 1.2500 acts as a big barrier for the pair, and unless the pair decisively breaks above that, any move northward will likely face selling pressure. On the downside, immediate support lies around 1.2375-1.2370, and a break below this zone could accelerate losses towards the 1.2300 round figure, with further downside potential extending to mid-1.2200s. The Bank of England’s cautious economic outlook and subdued market confidence in the UK economy add to the bearish sentiment, keeping the pair vulnerable. GBP/USD Daily Price Chart TradingView Prepared by ELLYANA The US Dollar is firm because of the positive employment data and expectations that interest rates by the Federal Reserve are going to remain steady. Additionally, new policies on tariffs introduced by Trump have further added fuel to the fire of inflationary concerns, which could support the USD and cap the recovery of GBP/USD. Market sentiment and risk appetite will be other important factors to determine the direction of the pair. Traders should closely watch upcoming US economic data releases and any shifts in the Fed-BoE policy divergence for fresh trading cues. Until GBP/USD breaks above its key resistance zones, the path of least resistance appears to be downward. TECHNICAL ANALYSIS GBP/USD remains bearish as it struggles below the 50-day Simple Moving Average (SMA), reinforcing selling pressure. The pair is facing stiff resistance at the 1.2500 psychological level, and only a decisive break above this could trigger further upside towards 1.2575-1.2600. On the downside, immediate support is seen at 1.2375-1.2370, and a sustained break below this zone could accelerate declines toward 1.2300 and mid-1.2200s. The overall setup favors bears, with momentum indicators like RSI and MACD tilting towards further downside. Until the pair recovers its key resistance, selling on rallies is a good strategy. FORECAST GBP/USD is likely to rally if it breaks decisively above the key resistance at 1.2500. A break above that area could propel a bullish move to the 1.2575-1.2600 region, where another resistance barrier awaits. If momentum continues, the pair may surge further toward 1.2645-1.2650, and challenge the 100-day SMA around 1.2715-1.2720. A shift in market sentiment, positive UK economic data, or signs of a more hawkish Bank of England (BoE) stance could provide additional fuel for the recovery. GBP/USD remains vulnerable as long as it trades below the 50-day SMA, with immediate support at 1.2375-1.2370. A breakdown below this level could intensify selling pressure, pushing the pair toward the 1.2300 round figure. If the bearish momentum continues, the next strong support will be seen at mid-1.2200s, and then the 1.2175 area. The strengthening US Dollar, due to solid rate outlook of the Federal Reserve and Trump’s tariff policies, will continue to cap the upside, and this makes the GBP/USD vulnerable to deeper losses.

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Currencies GBP/USD

GBP/USD Nears 1.2450 as Traders Await Fed Decision and UK Economic Outlook

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  • January 29, 2025
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GBP/USD continues to hover around 1.2450 ahead of the Federal Reserve’s policy decision, where the market is all but sure that rates will be maintained in the 4.25%-4.50% band. The Pound Sterling continues to suffer under rising stagflationary pressures in the UK, where labor demand remains weak and inflation refuses to budge. Adding to the uncertainty, renewed tariff threats by US President Donald Trump on key imports including computer chips and metals have seen an uptrend of risk aversion. At the same time, expectations for a rate cut of 25 basis points by Bank of England in February increase pressure on the British Pound. Investors are closely watching Fed Chair Jerome Powell’s remarks for clues on future monetary policy, while UK Prime Minister Keir Starmer remains optimistic about economic recovery and stronger US-UK trade ties. KEY LOOKOUTS • Markets anticipate the Fed will maintain rates at 4.25%-4.50%. Traders will closely analyze Fed Chair Jerome Powell’s remarks for any signals on future monetary policy shifts. • Deteriorating demand for labor and runaway inflation create fears of stagflation in the UK, further putting on pressure to the Pound Sterling, and intensifying expectations of an interest rate cut by the Bank of England in 2025. • President Trump’s plans to impose duties on imported components like computer chips and metals could further escalate tensions between them, increase averse sentiments towards risks, and strengthen the US Dollar against the Pound Sterling. • Markets are factoring in a 25 basis point rate cut in February, which will bring borrowing rates to 4.5%, further hammering down GBP/USD in the face of ongoing economic uncertainty. GBP/USD is on high alert as market participants await the Federal Reserve policy decision, in which the Fed is likely to maintain rates in the 4.25%-4.50% range. Traders will watch Fed Chairman Jerome Powell’s statements for clues on the next course of action for monetary policy. Meanwhile, the Pound Sterling underperformed with stagflation worries rising in the UK on labor demand weakness and stuck inflation leading speculators to begin expecting the Bank of England will cut the February interest rate. Also, President Donald Trump threatened higher tariffs for vital imports including computer chips and metals have amplified the risk aversion factor thereby sending the US Dollar surging ahead. Traders will pay close attention to developments in the US and the UK to get an idea of which way GBP/USD will take its next leg. GBP/USD holds around 1.2450 ahead of Fed’s policy decision that is widely seen to leave the interest rates as is. However, the concerns over the UK’s stagflation and President Trump’s new tariff threats pressure the Pound Sterling. Investors would keenly follow Fed Chair Powell’s speech for cues on the further monetary policy measures. • Federal Reserve would be holding onto the interest rate at 4.25% to 4.50% levels. Traders will be monitoring Jerome Powell closely for further monetary policy directions. • Stagflationary fears creep in with soft labor demand, coupled with unrelenting inflation. The pressure mounts on the British Pound, along with increased Bank of England rate-cut expectations. • Implications of US President Donald Trump, proposed tariffs on computer chips, pharmaceuticals, and metals that might push the trade tensions higher, a strong US Dollar, and increased risk aversion. • A 25 basis point cut in February is already priced into markets, which could reduce the borrowing rates to 4.5% and put more pressure on the GBP/USD. • Despite UK Prime Minister Keir Starmer’s optimism regarding economic recovery and trade ties with the US, the British Pound remains under pressure. • The cautious Fed stance, coupled with risk aversion resulting from uncertainty in trade policy, continues to support the US Dollar and limits gains in GBP/USD. • Investors are keeping an eye on the economic data releases, decisions of the central banks, and trade developments, as these factors will play a crucial role in determining the future movement of GBP/USD. GBP/USD is trading steady near 1.2450 as traders await the Federal Reserve’s policy decision, with markets almost certain that interest rates will remain at 4.25%-4.50%. Investors are closely monitoring Fed Chair Jerome Powell’s speech for any signals on future monetary policy direction, which could influence the US Dollar’s strength. Meanwhile, the British Pound faces pressure due to rising concerns over stagflation in the UK, driven by weakening labor demand and persistent inflation. Expectations of a 25 basis point rate cut by the Bank of England in February weigh further on GBP/USD, as the economic outlook remains uncertain despite Prime Minister Keir Starmer’s optimism about growth and trade relations with the US. GBP/USD Daily Chart TradingView Prepared by ELLYANA US President Donald Trump’s recent tariff threats on key imports, including computer chips and metals, have increased risk aversion, strengthening the US Dollar against the Pound. Any more trade tensions can keep piling pressure on global markets as investors seek the safe haven of the US Dollar. As economic uncertainty goes on, some key developments both out of the US and the UK will be followed as traders look towards the next leg in GBP/USD. Policy from central banks and trade dynamics will remain strong drivers for determining market direction. TECHNICAL ANALYSIS GBP/USD is still trading near 1.2450, but any selling pressure must be expected around key levels of resistance set at 1.2500 and 1.2550. On the flip side, immediate support is at 1.2400, and another stronger support area is seen closer to 1.2350. The Relative Strength Index, or RSI, is seen moving in neutral region, which also does not support the idea that it is in overbought or oversold territory. 50-day MA still remains flat, without any strong momentum, but the 200-day MA of 1.2600 does act as a longer-term resistance point. If the pair falls below 1.2400, then further falls could be possible. A breakout above 1.2500 might provide scope for further upsides. The level of price action will be watched closely because the upcoming policy decisions of Fed and BoE could create a surge in volatility. FORECAST

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