GBP/USD is currently at 1.3362 as of March 6, 2026, showing signs of consolidation after a brief dip to three-month lows around 1.3250 earlier this week. This marks a potential third consecutive weekly decline, significantly lower than the late-January peak of 1.3870. The 620-pip decline over a span of five weeks cannot be classified as a mere technical correction. The current situation reflects a significant adjustment in the risk premium associated with sterling, occurring amidst Brent crude priced at $90.08. The ongoing U.S.-Iran conflict has now reached its seventh day without any indication of a ceasefire, while the USD continues to withstand various geopolitical pressures as the primary reserve currency, irrespective of the latest U.S. economic indicators. February NFP reported at -92,000, contrasting with a consensus of 58,000 — a significant 150,000-job deviation that would typically lead to a sharp decline in the dollar. The GBP/USD experienced a brief spike upon the release but quickly retraced its gains. A pair that fails to maintain a rally despite the worst U.S. jobs report in years reveals significant insights into the underlying structural forces at play. February’s -92,000 payroll print represents a significant downturn when evaluated against historical benchmarks. January’s figures have been adjusted downward to 126,000, a decrease from the previously reported 130,000. December’s numbers have been revised to -17,000, down from +65,000. The average over the past three months stands at 6,000 jobs. In a typical macro environment, that data prompts swift dollar selling, Fed cut pricing intensifies, and GBP/USD surges 150-200 pips higher within the hour. That is not the case. The pair experienced a brief spike before settling back at 1.3362, as the dollar’s appeal as a safe haven amid ongoing conflict in the Middle East is effectively countering any bearish data-driven influences without hesitation.
The explanation is both straightforward and harsh: average hourly wages increased by 0.4% month-over-month, surpassing the 0.3% forecast, and rose by 3.8% year-over-year. Job losses, along with rising wages and oil prices at $90, indicate stagflation. A Federal Reserve confronted with stagflation faces the challenge of not being able to lower rates without the danger of triggering an inflation surge. The CME FedWatch indicates a mere 35.3% likelihood of a rate cut occurring before June. Deutsche Bank observed that “strong data meant investors kept pricing out the likelihood of an H1 rate cut from the Fed.” The ISM non-manufacturing index reached 56.1 for February, marking a three-year high compared to the consensus of 53.5. The U.S. economy is currently experiencing a dual dynamic of job losses alongside robust service sector activity and wage increases that exceed expectations. The interplay of these factors constrains the Federal Reserve and bolsters the USD, irrespective of the reported payroll figures. The Dollar Index is currently positioned at 99.21, maintaining its upward trajectory within the 2-hour chart’s ascending channel, and remains above the 50-day EMA at 98.87 and the 200-day EMA at 98.03. The price has stabilized slightly above the 0.236 Fibonacci level at 99.18, with buyers actively defending their position instead of pulling back — indicating a structural pattern that suggests a continuation of the trend rather than a sign of exhaustion. The RSI is currently positioned between 55 and 60, indicating a consistent directional momentum, free from the overbought levels that have typically prompted reversals in the past. The Fibonacci retracement levels of 0.382 and 0.5, positioned at 98.87 and 98.62 respectively, are serving as layered support within the channel. A sustained break above 99.50 aims for 99.68 initially, followed by the key psychological level of 100.00. ING indicated that “the dollar can edge towards the top of recent ranges” amid the prevailing uncertainty, noting that developments in energy prices related to the Strait of Hormuz and Qatar LNG facilities will continue to be the primary influence over any individual data point.
MUFG cautioned that a prolonged conflict “would increase downside risks for the global economy and the risk of a more persistent inflation shock,” noting that their forecasts for temporary dollar strength are “based on the assumption that the conflict lasts weeks rather than months.”” The demand for unconditional surrender from Trump, alongside Defense Secretary Hegseth’s proposed operational timeline of three to eight weeks, poses a significant challenge to that assumption. If the conflict persists for an extended period, every institution currently projecting temporary USD strength will have to adjust their models — and the adjustment will be solely in one direction. GBP/USD is currently confined within a distinct bearish channel on the 2-hour chart, trading at 1.3362, with the price positioned below both the 50-day and 200-day EMAs — each exhibiting a downward slope, further solidifying the existing directional bias. The channel midline and the 1.3375-1.3400 resistance zone have consistently thwarted all recovery efforts this week. Immediate support is observed at 1.3306, followed by 1.3254, and then the channel base at 1.3210. The RSI is positioned between 45-50 — indicating it is neither oversold nor producing capitulation readings that would encourage contrarian buying, but rather reflecting a continuous bearish momentum without any signs of relief. UoB highlighted the potential for a decline to 1.3250 and remarked that “only a breach of 1.3450 would indicate that GBP is not weakening further.” The 1.3450 level is positioned 88 pips above the current price and is situated above both EMAs. Surpassing this level necessitates either the reopening of Hormuz or a significant pivot signal from the Fed, neither of which seems to be on the horizon.
Scotiabank noted that “extended lower shadows on the daily charts are suggestive of persistent support as the GBP recovers from deep intraday lows” and identifies potential for a rise above 1.3400 — representing the most favorable near-term bullish scenario available. However, Scotiabank’s optimism is still constrained by 1.3400. The currency pair approached 1.3300 on Thursday, subsequently rebounding to 1.3360 amidst volatile and indecisive market movements. Small-bodied candles observed over three consecutive sessions indicate a state of indecision following a significant sell-off, rather than suggesting a foundation for a prolonged recovery. Indecision during a downtrend typically leads to a downward resolution. Thursday’s session clearly demonstrated that geopolitics has taken precedence over macroeconomics as the main influence on GBP/USD. The pair experienced a temporary rebound following reports suggesting that Iran had indirectly indicated a willingness to engage in discussions with the CIA — a bounce fueled by speculation that proved short-lived, as Israeli officials later urged Washington to dismiss the overture. The recovery has diminished entirely. The pattern observed — an increase in value on ceasefire speculation, followed by a downturn on refutation — has occurred several times this week and aptly illustrates the dualistic characteristics of the present trading landscape. Without a technical pattern, data release, or central bank statement, GBP/USD is unlikely to see a sustainable increase until there is a significant de-escalation of the conflict or the Strait of Hormuz is reopened to tanker traffic.
Danske Bank observed that if oil pressure persists, the U.S. may contemplate selling strategic reserves — however, it was clearly stated that strategic reserve releases “will not be able to replace the oil shut in behind the Strait of Hormuz.” Trump’s Truth Social post calling for unconditional Iranian surrender has effectively shut down the diplomatic avenue that was offering any remaining support for risk assets. In the absence of a credible de-escalation pathway, the demand for the safe-haven dollar is fundamentally structural rather than tactical. The GBP encounters a similar structural energy vulnerability as the EUR — the UK relies heavily on energy imports, and each dollar increase in Brent prices above $70 imposes a direct burden on consumer spending, corporate margins, and real GDP growth in the UK. Consumers in the UK are currently experiencing increased fuel prices at the pump. The probability of a rate cut by the Bank of England, which stood at 75% a few weeks back due to a slowdown in UK GDP from 1.4% to 1.1%, has now plummeted to around 20% as inflation driven by energy prices complicates the central bank’s capacity to implement easing measures. A central bank unable to address slowing growth due to rising imported energy costs finds itself in a stagflation predicament similar to that of the Fed, yet lacks the support of the USD’s safe-haven appeal to mitigate the impact on growth.
The decline from 1.3870 to 1.3250 over a span of five weeks signifies a reduction of 620 pips in risk premium. Each level that acted as support during the ascent — 1.3750, 1.3680, 1.3600, 1.3500, 1.3400 — has been breached on the descent without significant resistance. Every failure reinforces the inherent structure of the movement instead of indicating that sellers are worn out. GBP/USD presents a selling opportunity on any rebound to the 1.3375-1.3400 range, with targets set at 1.3254 followed by 1.3210. A daily close above 1.3450 would trigger a stop. The bearish channel structure is evident, with both EMAs trending downward. The RSI stands at 45, while the DXY is aiming for 100.00. The probability of a BoE rate cut has plummeted from 75% to 20%. Additionally, the ongoing conflict in the Middle East lacks a clear resolution timeline, culminating in a comprehensive bearish setup for GBP/USD since the onset of the Iran conflict. The NFP miss that failed to sustain the pair above 1.3400 for more than a few minutes serves as a clear indication: the dollar’s geopolitical safe-haven premium outweighs any single data point that sterling might leverage as a recovery catalyst. Until 1.3450 is convincingly breached with volume, each rally represents supply.