GBP/USD Price Forecast - Pairs at 1.34 as Weak U.S. Jobs Data Clash with BoE Cut Bets into Year-End

GBP/USD: Data-Heavy Break Above 1.34 Faces BoE Cut and Soft U.S. Labor in a Tight Tug-of-War

Current tape: GBP/USD holding 1.34 after a data shock on both sides of the Atlantic
GBP/USD is trading around 1.34–1.3430 after a sharp intraday move driven almost entirely by macro data and central-bank repricing. On the U.S. side, November nonfarm payrolls rose only 64,000 after a -105,000 print in October, while the unemployment rate jumped from 4.4% to 4.6%. Retail sales for October were flat at 0.0%, with the “control group” rebounding 0.8% after -0.1%, painting a mixed growth picture. The dollar index slipped toward the 97.9 area, giving GBP/USD room to push to the 1.3430–1.3450 zone. On the UK side, the pair is being pulled in the opposite direction by the prospect of a 25 bp Bank of England cut to 3.75%, even as data doesn’t fully validate an aggressive easing cycle. The result is a pair that’s bid, but climbing into increasingly heavy event risk.

UK macro: GBP supported by stronger PMI and sticky prices, capped by 5.1% unemployment and rising claims
Domestic activity in the UK is not collapsing; it’s stabilizing. The composite PMI for December improved to 52.1 from 51.2, beating 51.6 expectations and holding above the 50 expansion line. Under the surface, input prices rose at the fastest pace since May, and output prices jumped to the highest level since August, meaning firms are again pushing costs through the system. That combination—PMI at 52.1, cost pressures re-accelerating—does not justify an aggressive easing cycle, which is why GBP is outperforming weaker-growth peers.
At the same time, the labour market is clearly softening. The ILO unemployment rate in the three months to October climbed to 5.1% from 5.0%, the highest since early 2021. Claimant counts increased by 20,100 in November, and payrolls fell by roughly 17,000 in October. Wage growth is still elevated but off the boil: average earnings ex-bonus are up 4.6% YoY, total pay up 4.7%, both lower than earlier peaks and drifting toward inflation, which last printed around 4.1%.
For GBP, this mix is nuanced: growth isn’t falling apart, pricing power is re-emerging, but labour is no longer tight. That is exactly the kind of backdrop where the BoE can justify a cautious 25 bp cut, but not a rapid easing path. That is why upside in GBP/USD exists—but with a hard ceiling if the Bank signals more than roughly 50–60 bp of cuts for 2026.

U.S. macro: USD pressured by 64k NFP, 4.6% unemployment and flat retail sales despite firmer control group
On the USD side, the data are eroding the “higher for longer” story. November payrolls at 64,000 came in above the 50,000 consensus but look weak next to October’s -105,000 revision. The unemployment rate climbing to 4.6% versus 4.5% expected and 4.4% prior signals that slack is building. Retail sales at 0.0% for October against 0.1% expected reinforce the cooling narrative, even if the GDP-relevant control group at +0.8% offsets some of that weakness.
Markets are already positioned for a Fed that is done hiking and will cut in 2026 more than the Fed’s own guidance implies. Each soft datapoint—64k jobs, 4.6% unemployment, flat headline sales—pushes investors further toward that view. As a result, dollar rallies are being sold systematically, and GBP/USD is reacting precisely as you’d expect: every dip toward the 1.33–1.3350 region is drawing buyers back in.

BoE vs Fed: GBP/USD trapped between an 85–92% priced BoE cut and a market that sees deeper Fed easing
Rate expectations are now doing most of the heavy lifting in GBP/USD. Markets are pricing around an 85–92% probability that the BoE cuts the Bank Rate from 4.00% to 3.75% at the upcoming meeting. Traders also expect roughly 50–60 bp of total easing through 2026. In isolation that is bearish GBP.
However, the Fed side is more dovish in market pricing than in official communication. Investors see multiple cuts in 2026 despite the Fed’s more cautious stance. With U.S. unemployment at 4.6%, job gains at 64k, and growth indicators moderating, the risk is that the Fed eventually converges toward market pricing, not the other way around. That asymmetry caps USD upside.
For GBP/USD, this means:

• A straightforward BoE 25 bp cut with a measured tone (roughly 50 bp of 2026 cuts signaled) likely keeps the pair supported above 1.33 and allows retests of the 1.3470–1.3500 band.

• An unexpectedly dovish BoE signal—hinting at more than 50–60 bp of easing next year—could drag GBP/USD back toward 1.33 or even 1.3220, especially if the Fed refrains from echoing dovish rhetoric at the same time.

Short-term price action: GBP/USD break above 1.34 is real, but running into layered resistance
From a pure tape-reading perspective, the recent structure in GBP/USD is constructive but stretched. The pair has broken above multiple short-term moving averages and is trading above the 200-day simple moving average near 1.3360, a level that now acts as first-line support. Recent price action shows:

• Intraday highs around 1.3415–1.3432, confirming demand above the 1.34 handle.

• Clear resistance at the 1.3400–1.3440 band, where sellers repeatedly emerge ahead of macro events.

• A broader upside target zone between 1.3471 (mid-October high) and the psychological 1.3500 level.
  The structure resembles an ascending pattern where each dip toward 1.3350 has attracted buying. As long as spot holds above 1.3350, the market is signalling that participants are prepared to buy GBP/USD into event risk rather than aggressively fade strength.

Technical levels: where GBP/USD bulls and bears are actually positioned
For positioning and risk management, the current map on GBP/USD is very clear:

• Immediate resistance:

  • 1.3440–1.3471: recent swing high zone and the October peak.

  • 1.3500: psychological barrier; a clean daily close above opens space toward 1.36 and re-pricing of the entire 2025 range.

• First support cluster:

  • 1.3400: intraday pivot; a daily close back below weakens the very short-term bull case.

  • 1.3360–1.3369: 200-day moving area; loss of this level signals that the breakout above 1.34 was “false” and invites momentum sellers.

• Deeper supports:

  • 1.3350: prior demand zone and 4H support; a decisive break is the first serious warning shot to bulls.

  • 1.3300–1.3280: round number plus 100-period moving support on intraday charts; failure here shifts the structure from “buy dips” to “range with downside bias”.

  • 1.3220: next obvious downside waypoint from prior swings.

  • 1.3100–1.3000: only in play if both BoE and UK data deliver a negative surprise; that would represent a full rejection of the 1.34 breakout narrative.
    Right now, price is closer to resistance than to these deeper supports, which is why fresh entries at market carry more risk-reward asymmetry than buying a flush toward 1.3350 or below.

Sentiment and flows: GBP benefits from relative growth resilience and inflation stickiness
Sentiment indicators embedded in the commentary you’re working with point to a consistent pattern:

• UK: PMI at 52.1, wage growth still 4.6–4.7%, unemployment only slowly edging up to 5.1%, and inflation around 4.1%. That profile looks like late-cycle cooling, not recession. For GBP, that means investors see room for gradual BoE cuts, but not a crash in yields.

• US: A labour market that has gone from tight to merely adequate—64k jobs, 4.6% unemployment—and consumption that is plateauing (headline sales 0.0%, control group +0.8%). For USD, that chips away at the carry premium that previously supported the dollar.
  Options markets are reflecting this tug-of-war with rising implied volatility around near-term expiries on GBP/USD, particularly those straddling the BoE decision and incoming U.S. data. That is consistent with a market expecting a directional break out of the 1.3350–1.3470 band but not yet committed to which side.

Trading stance: is GBP/USD a buy, sell, or hold at 1.34–1.3430?
Given the numbers and the structure, the cleanest way to classify GBP/USD right now is:

• Directional call: Short-term bullish / “Buy” with defined risk.

• Bias: Bullish so long as daily closes hold above 1.3350 and especially above the 200-day region at 1.3360–1.3369.

• Upside price target: Primary technical target at 1.3500, with a stretch target at 1.3600 if the BoE cuts by 25 bp but avoids signalling an aggressive 2026 easing path and U.S. data continue to undershoot.

• Invalidation: A decisive break and daily close below 1.3350, followed by pressure on 1.3300–1.3280. Under that scenario, the rating would shift from Buy to Hold/neutral, with risk of a deeper slide toward 1.3220.

So at 1.34–1.3430, GBP/USD is not cheap, but the data you have—UK PMI at 52.1, wages still above 4.5%, U.S. unemployment at 4.6%, NFP at 64k, and a market pricing a BoE cut that aligns with fundamentals more than fights them—still argue for a buy-on-dips strategy rather than fading strength. The bullish case only genuinely breaks if the BoE over-delivers on dovish guidance and U.S. data rebound enough to push the dollar index meaningfully back above current 97–98 levels.

That's TradingNEWS