GBP/USD Price Forecast - Pound Under Pressure Near 1.3550 as Softer UK Data Drags Focus Toward 1.3400

GBP/USD – downside bias builds below 1.36 as UK data softens and dollar firms

Macro backdrop and spot levels for GBP/USD

GBP/USD is trading heavy around 1.3550–1.3570 after sliding from the 1.3810–1.3875 zone. The pair has already broken a short-term bullish trend line and is pressing the lower edge of the broader structure that starts from the 1.3340 base. Immediate downside markers sit at 1.3510–1.3500 and 1.3495–1.3497; a clean break there exposes 1.3420 and then the more important 1.3400 area. On the topside, 1.3580 is the first pivot that needs to be reclaimed, followed by 1.3663–1.3733 before the market can realistically talk about another run at 1.38+.

UK labour market: unemployment at 5.2% and wages cooling

The UK jobs data is no longer a tailwind for GBP. Unemployment has risen to 5.2%, the highest level in almost five years, versus 5.1% previously. Payrolls fell by roughly 130,000 in the three months to December, confirming a softening labour market rather than a one-off print. Average earnings growth has cooled to about 4.2% in December, clearly below the peak wage pressure BoE was fighting in 2024–2025. A labour market that is losing jobs while pay growth is moderating pulls directly against sterling strength and encourages markets to price earlier and deeper rate cuts.

UK inflation: CPI at 3.0% and core at 3.1% keeps BoE on track to ease

Inflation is still above target but now firmly on a downward trajectory. Headline CPI has eased from 3.4% in December to 3.0% in January. Core inflation, excluding food and energy, has slipped to around 3.1%. The retail price index is moving from 4.2% towards roughly 3.9%. That combination — disinflation plus a softer labour market — gives the Bank of England room to pivot away from emergency-tight policy. With price growth already within a percentage point of target, every incremental downside surprise in CPI strengthens the case for cutting Bank Rate in 2026 rather than holding at restrictive levels.

Market pricing: futures see Bank Rate near 3.25% with risk of a third cut

Rate futures have shifted decisively since early February. The market now prices two cuts this year that would take Bank Rate down to roughly 3.25%, and the probability of that path has gone from around 50% to close to fully priced. Some houses are already discussing the risk of a third cut; if derivatives start to price that scenario, GBP will face sustained pressure across the board, not just against USD. For GBP/USD specifically, a BoE easing cycle into a still-cautious Fed widens the policy divergence in favour of the dollar and structurally caps rallies.

US dollar: DXY grinding higher around 97.20–97.60 with Fed still cautious

On the US side, the dollar retains the advantage without being in a blow-off rally. The DXY trades around 97.20–97.40, leaning against resistance near 97.60 with a 0.5 Fibonacci retracement at 97.21 and the 200-period EMA up near 97.98 acting as a ceiling. Fed officials have made it clear they want more evidence that inflation is moving convincingly towards 2%. That tone has pushed out expectations for aggressive cuts and keeps the dollar supported. At the same time, progress in US–Iran talks and calmer risk sentiment drain some safe-haven demand, which is why the greenback is grinding higher rather than surging.

Event risk: FOMC minutes and UK CPI keep volatility elevated around 1.3550

Near term, GBP/USD is pinned between central-bank event risks. On one side, the UK CPI profile sliding from 3.4% to 3.0% headline and to 3.1% core reinforces the narrative that the BoE can start easing. On the other, the FOMC minutes will clarify how comfortable the Fed is with the current inflation path and whether the market has gone too far in repricing cuts. A hawkish-leaning set of minutes with UK data still soft would amplify the downside pressure on GBP/USD and make a break of 1.3495–1.3500 much more likely.

Four-hour structure: triangle squeeze breaking lower near 1.3580

On the four-hour chart, GBP/USD is trading just under 1.3570 at the intersection of a rising trend line from 1.3340 and a descending line from 1.3810–1.3870, effectively a tight triangle that is now tilting lower. Price briefly probed support near 1.3497 and snapped back, leaving a long lower wick that shows buyers defending the area, but the inability to reclaim the breakdown zone around 1.3580 is the key tell. That former support is now acting as resistance, confirming that the short-term control has shifted to sellers as long as spot trades below it.

Moving averages and oscillators: EMAs roll over while RSI slips below 50

Trend filters and momentum back the downside bias. On the four-hour timeframe, the 20-period EMA slopes lower and caps price near 1.3590. The 50-period EMA is also drifting down around 1.3620, adding a second layer of resistance above spot. The 200-period EMA sits almost exactly at 1.3570, turning that zone into a dense cluster where rallies are getting sold. The 14-period RSI on the same chart is around 44, below the 50 midline, which indicates subdued upside momentum without being oversold. On the daily chart, the RSI has also slipped under 50, and the Percentage Price Oscillator has formed a bearish crossover heading towards the zero line, a typical pattern before another leg lower.

Daily trend: broader uptrend still intact but being tested from below

Zooming out, the daily structure is not yet a confirmed bear trend. The Supertrend indicator on the daily chart remains green, and spot still trades above the 50-day exponential moving average, signalling that the larger uptrend from the 1.3340 base is technically alive. The issue is where price is inside that structure: instead of riding the trend line, GBP/USD is now testing it from the underside and failing to sustain bounces above 1.36. That position — trend technically intact but price leaning on the lower edge — usually resolves either with a sharp rejection higher or a clean break that resets the entire bias. Given the macro backdrop, the burden of proof sits on the bullish side.

Key levels: 1.3510, 1.3495, 1.3420 and 1.3400 on the downside; 1.3663 and 1.3733 on the upside

The short-term roadmap is clear in price terms. Support sits first at 1.3510–1.3500, then at the 1.3495–1.3497 band. A decisive break below that second layer unlocks 1.3421 and then the January 22 low and DailyForex target area near 1.3400. That 1.3400 zone aligns with the measured move from the triangle break, previous swing lows, and the logical extension of the current pullback from 1.3870, so it will attract profit-taking and fresh decision-making. On the upside, recovery attempts must first get through 1.3580, then 1.3663, and then 1.3733. Only a sustained move above 1.3733 would start to neutralise the bearish narrative and re-open the path towards 1.38+.

Positioning bias: bearish GBP/USD stance with Sell preference and 1.3400 target

Given the mix of softer UK labour data, disinflation that gives the BoE room to cut towards 3.25%, a firm US dollar around 97.20–97.60, and a technical setup that has broken short-term support and rolled over key EMAs, the directional bias remains negative for GBP/USD. The structure favours a Sell stance with downside extension towards 1.3400 over the coming sessions, using 1.3510–1.3495 as the trigger zone and 1.3660–1.3730 as the area that would invalidate the bearish view if reclaimed and held. Until price can close decisively back above that upper band, rallies into the 1.3590–1.3620 region are better treated as opportunities to sell strength rather than signals of a durable trend reversal.

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