The Pound fell back from weekly highs above 1.3700 and moved to about 1.3680 on Wednesday. A weaker US Dollar after weak US data on Tuesday helped to limit the drop, while the UK political situation weighed on Sterling.
Markets are cautious ahead of the delayed US Nonfarm Payrolls report due later on Wednesday. Forecasts point to 70K jobs added in January versus 50K in December, with unemployment seen at 4.4% and annual wage growth expected at 3.6% versus 3.8%.
Technical Picture For Gbp Usd
GBP/USD recovered some losses and traded near 1.3680 during European hours. The daily chart shows the pair still moving within an ascending channel.
The 14-day RSI is 55.94, which is above 50. The nine-day EMA is above the 50-day EMA, with the 50-day EMA at 1.3518, and the pair remains above both averages.
We are seeing the Pound retrace some of its recent losses against the US Dollar, but it’s struggling to push decisively above the 1.2900 level. The current hesitation around 1.2850 seems to be driven by a slightly improving UK economic picture, which is offsetting the Federal Reserve’s firm stance on interest rates. This situation feels very similar to the uncertainty we navigated back in early 2025 when rate decisions were just as unclear.
Derivative traders should be cautious ahead of the upcoming US Nonfarm Payrolls report. Current market expectations are for a net job growth of around 95,000, with the unemployment rate holding at 3.9%, according to recent surveys from major financial news outlets. A weaker-than-expected number could weaken the Dollar and provide a tailwind for the Pound.
Options Strategy And Key Support
Given this outlook, we believe buying near-term call options on GBP/USD could be a prudent strategy for the coming weeks. For instance, options with a strike price of 1.2950 would offer upside exposure if the US jobs data comes in soft. This approach effectively limits downside risk if the Dollar unexpectedly strengthens.
The pair remains above its 50-day moving average, which currently sits near 1.2780, suggesting the medium-term trend is still constructive. This technical floor is reminiscent of the support we saw hold throughout the second half of 2025, which preceded a notable rally. As long as we hold above this level, a bullish bias is warranted.
