GBP/USD Bears Stay in Control After Mixed UK Jobs Report

Summary:

GBP/USD trades near a five-week low around 1.3465 as mixed UK employment data fails to support Sterling. Expectations for further Fed tightening, while the BoE is likely to remain on hold, continue to favor the Dollar.

Sell GBPUSD

End Time

CLOSED

1.34800

ENTRY

1.33300

TGT

1.35800

1.34039 +0.00253 +0.19%

154

Points

Profit

1.33300

TGT

1.34646

CLOSING

1.34800

ENTRY

1.35800

The British Pound remains under selling pressure against the US Dollar on Tuesday, with GBP/USD slipping toward 1.3465, its weakest area in roughly five weeks. Sterling found little relief from the latest UK labour-market figures, while expectations for diverging policy paths between the Federal Reserve and Bank of England continue to favor the Greenback.

Britain’s employment report offered a mixed picture. The ILO unemployment rate held at 4.9% in the three months through July, slightly better than the expected increase to 5.0%. However, the claimant count painted a weaker picture of labour demand, rising by 27,800, substantially above the 8,300 increase forecast and reversing the previous month’s 11,800 decline.

Attention now shifts toward Wednesday’s UK inflation report and Thursday’s BoE decision. Policymakers are widely expected to leave borrowing costs unchanged, although a significantly stronger-than-anticipated CPI reading could revive expectations for additional tightening.

With Governor Andrew Bailey not scheduled to hold a press conference, markets are likely to scrutinize the policy statement and voting split for indications of how much support exists for another rate increase before year-end.

The BoE is also reportedly considering changes to its bond-reduction program. According to The Telegraph, the central bank could stop selling longer-dated 20- and 30-year securities in an effort to avoid adding further upward pressure to UK borrowing costs during the current period of global bond-market volatility.

Across the Atlantic, the Dollar continues to draw support from expectations of renewed Fed tightening. US Retail Sales are forecast to increase 0.9% in August, following a 0.6% decline previously, although the data may be overshadowed by the approaching FOMC decision.

Markets are preparing for what would be the Fed’s first rate hike in three years, while expectations have increasingly shifted beyond the immediate decision. Commerzbank notes that futures now imply around 51 basis points of cumulative tightening by year-end, effectively leaving markets positioned for two increases across the remaining three meetings.

That repricing has helped restore momentum behind the US Dollar and remains the central challenge for Sterling. Unless UK inflation materially strengthens the case for a more aggressive BoE response, the widening policy contrast could keep GBP/USD vulnerable near its recent lows, with short-lived recoveries likely to face renewed selling pressure.

Technical Analysis

GBP/USD remains technically vulnerable on the 4-hour chart, with price trading around 1.3482 after extending the sequence of lower highs that has developed since the late-August peak. The broader structure has shifted increasingly bearish, and recent attempts to recover have repeatedly failed beneath established resistance.

The 1.3470–1.3490 region is now the immediate battleground. This area previously provided support on several occasions, but price is beginning to trade underneath it, raising the risk that former support is turning into resistance. The repeated tests have also weakened the zone, while the latest rebound has lacked enough momentum to restore the pair above it decisively.

A short-term recovery toward 1.3490–1.3510 remains possible, particularly after the recent decline, but such a move would currently look corrective. Sellers retaining control below this area would strengthen the case for another bearish leg.

Higher up, the next major resistance sits around 1.3560–1.3570. The chart shows several previous reactions from this region, making it an important invalidation area for the immediate bearish setup. A sustained recovery above 1.3570 would weaken the current downside structure and could reopen the path toward the much stronger 1.3650–1.3665 supply zone.

On the downside, a decisive H4 close beneath 1.3460–1.3470 would provide stronger confirmation that the latest support has failed. With relatively limited visible structural support immediately below, the breakdown could allow bearish momentum to accelerate.

The primary downside objective is the large demand zone around 1.3325–1.3340, which corresponds closely with the projected bearish move shown on the chart. This region represents the clearest significant support below current levels and would be a logical area for sellers to begin taking profits.

Overall, the setup remains bearish while GBP/USD stays below 1.3500, with the sequence of lower highs and pressure against former support favoring continuation. A brief retest of the breakdown area could occur first, but failure to reclaim it would keep 1.3330 firmly in focus.

TRADE RECOMMENDATION

SELL GBP/USD

ENTRY PRICE: 1.3480

STOP LOSS: 1.3580

TAKE PROFIT: 1.3330

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

3006

Win Rate

63.66%

P/L Ratio

0.74

Focus on

XAUUSD, EURUSD, GBPUSD

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