GBP/USD is currently positioned between 1.3450 and 1.3465, undergoing consolidation following its inability to maintain the 1.3560–1.3570 peak, marking the highest point since mid-September. The pair is currently confined within a distinct short-term range, with support located around 1.3400 and resistance positioned between 1.3520 and 1.3560. The US Dollar Index is currently positioned between 98.70 and 98.80, facing resistance in the range of 99.05 to 99.30, while finding support close to 98.50. This situation results in GBP/USD remaining in a sideways movement rather than establishing a clear trend. The most recent data from the US presents a mixed picture, which clarifies the constraints on USD strength. ISM Services PMI increased from 52.6 to 54.4, surpassing the anticipated 52.3 and indicating robust growth in the leading services sector. Conversely, labor indicators showed a decline: JOLTS job openings decreased to 7.146 million compared to a consensus of 7.6 million, while ADP employment increased by only 41,000 jobs against an expectation of 47,000 following a slight drop in the previous month. The interplay of robust economic activity alongside subdued hiring maintains support for the dollar, yet it curtails any significant upward movement in DXY, consequently restricting the potential decline of GBP/USD beneath the 1.3400 threshold.
The commentary from the Fed is consistent with the trends observed in the labor market. One Federal Reserve governor has publicly advocated for significant rate reductions in 2026, whereas other officials caution that the unemployment rate may increase more rapidly than expected. Current market sentiment indicates that the Federal Reserve is leaning more towards easing rather than tightening monetary policy. The upcoming catalyst is the December NFP, with expectations centered on the creation of 55,000–60,000 jobs, a decrease from November’s 64,000. The unemployment rate is anticipated to be approximately 4.5%, down from the previous 4.6%. A downside surprise strengthens the easing narrative and bolsters GBP/USD; a significant beat would provide DXY the opportunity to surpass 99.30 and exert pressure on the pair toward or beneath 1.3400. From a technical perspective, GBP/USD continues to exhibit a constructive range. The price is currently consolidating following the pullback from the 1.3560–1.3570 range towards the 1.3450 area. Several analyses indicate horizontal support around 1.3400, with demand persistently emerging in the 1.3440–1.3460 range. On short-term charts, the pair is positioned slightly above the 200-period moving average, with the 50-period MA showing a flattening trend, indicating a phase of consolidation rather than a potential reversal.
The RSI is currently positioned in the low- to mid-40s range, indicating a reduction in momentum while avoiding oversold territory. Provided that 1.3400 remains intact, the framework supports purchasing on dips instead of selling on rallies. The DXY configuration indicates that GBP/USD is likely to remain within a range until the NFP data resolves the current stalemate. The index is currently positioned between 98.70 and 98.80 within an upward channel established since late December. Support is identified around 98.50, while resistance is noted at levels of 99.05 to 99.30. The 50-period moving average is trending upward just below the current price, serving as a dynamic support level, whereas the 200-period moving average is positioned higher, limiting potential gains. The RSI hovering in the mid-50s indicates a neutral momentum: sufficient to prevent a USD decline, yet lacking the strength to trigger a definitive upward breakout. For DXY, a traditional tactical approach involves purchasing near 98.50 with a target of 99.30, while maintaining risk below 98.15; regarding GBP/USD, this suggests that any rallies in sterling will require a definitive break lower in DXY to surpass 1.3560.
The Bank of England is anticipated to implement rate cuts; however, the trajectory is expected to be more gradual and slower than previously priced in, and more cautious compared to current market expectations for the Fed. This relative position has bolstered GBP in recent months and is a significant factor in GBP/USD trading around 1.3450 rather than revisiting the lows. The narrative surrounding the rate differential is straightforward: a Federal Reserve inclined towards quicker cuts, contrasted with a Bank of England adopting a more gradual approach, benefits sterling on a relative scale, even amidst a scenario where both central banks are engaged in an easing cycle. The recent price movements validate the ongoing consolidation phase. GBP/USD is currently stable around 1.3465 in the early European session, with recent candles displaying small bodies grouping above 1.3450. The price movement around a rising trendline, along with consistent buying in the 1.3440–1.3460 range, indicates accumulation rather than capitulation. This represents a typical post-rally consolidation following the movement to 1.3565–1.3570, as the market processes previous gains while anticipating the next macroeconomic catalyst – specifically, the US labor data. Risk sentiment and geopolitical factors are significant for the USD, which in turn impacts GBP/USD. The United States has intensified its engagement in Venezuela, taking control of crude oil, apprehending President Maduro, and indicating that American energy firms may re-enter to invest substantial amounts in the nation’s oil industry. The movement drove WTI to a temporary high of $58.32 and Brent to approximately $61.76, after which prices retraced slightly. The episode heightened global uncertainty, bolstered safe-haven demand for USD, and constrained GBP/USD upside potential. Concurrently, the VIX’s increase of approximately 2% indicates that investors are seeking equity protection, which supports a short-term bullish outlook for the dollar, despite the medium-term trajectory of the Fed being unfavorable for the dollar. The upcoming data releases will determine if GBP/USD approaches the upper or lower bounds of its range. Initial Jobless Claims are scheduled to be released prior to the NFP, providing an initial assessment of the cooling labor market theory.
Manufacturing data has shown signs of weakening, while services remain robust at 54.4. If claims and NFP indicate a slowdown to 55K–60K jobs and unemployment around 4.5%, the argument for earlier and more significant Fed cuts becomes stronger, which should negatively impact DXY, allowing GBP/USD to potentially rise back toward 1.3520–1.3560. On the other hand, a significant positive surprise in employment figures could postpone the timeline for easing, possibly pushing DXY above 99.30 and pulling GBP/USD down toward or below 1.3400 in the near term. The movements in EUR/USD and EUR/GBP support the notion that GBP is maintaining a strong position. EUR/USD is currently positioned at approximately 1.1680, trading below its 50-day EMA, within a broader range of 1.14–1.18, while the 200-day MA is situated around 1.1720, limiting upward movements. The pair is nearing the upper limit of its range, increasing the probability of pullbacks as the markets anticipate the NFP data. The EUR/GBP pair has rebounded from its 200-day EMA, with potential targets near 0.8720 before further selling pressure may emerge, indicating a belief that the Bank of England will implement cuts at a slower pace compared to the European Central Bank. This differential provides an advantage to GBP compared to EUR, thereby indirectly bolstering GBP/USD even in the presence of a strong DXY.
The buy zone is identified between 1.3400 and 1.3440, where horizontal support, trendline demand, and previous reaction lows intersect.The resistance and take-profit zone is identified at 1.3520–1.3560, a level where multiple recent rallies have encountered obstacles and profit-taking has consistently occurred.Intraday traders may consider structuring setups by purchasing dips near 1.3440, with risk positioned just below 1.3390 and targets aimed toward 1.3520–1.3560. Meanwhile, medium-term accounts should monitor daily closes to see if they stay above 1.3400 and assess whether DXY can break above 99.30 following the NFP report. After analyzing all components – GBP/USD stabilizing between 1.3450 and 1.3465, DXY restricted under 99.30, varied yet weakening US labor statistics, Fed commentary suggesting significant reductions, a BoE anticipated to proceed with caution, and cross-market indicators supporting sterling – the overall directional inclination remains favorable for sterling in the medium term. The event risk associated with NFP may lead to increased volatility; however, the pair appears more inclined to move upward from the 1.34 region rather than initiate a new downtrend, provided that support at 1.3400 and DXY resistance around 99.30 remain intact. Stance on GBP/USD: BUY, with a working range of 1.3400–1.3560 and potential for further upside beyond 1.3560, contingent upon US labor data supporting the Fed’s easing trajectory and a stabilization of risk sentiment.