GBP\/USD recouped about half of its early losses in European trading on Tuesday, but remained down 0.23% near 1.3600. The move followed weaker UK labour market data for the three months to December.<\/p>\n
The UK ILO Unemployment Rate rose to 5.2%, the highest in five years, versus forecasts of 5.1%. Jobs created were 52K, down from 82K previously.<\/p>\n
Average Earnings Excluding Bonuses eased to 4.2% YoY, in line with expectations, from 4.4% (revised down from 4.5%). Average Earnings Including Bonuses fell to 4.2% from 4.6% in the three months to November.<\/p>\n
Attention turns to the UK January CPI release due on Wednesday. The US Dollar traded broadly steady ahead of the US market open after a long weekend.<\/p>\n
GBP\/USD was around 1.3594, below the 20-period EMA at 1.3624. The 14-period RSI stood at 42, below 50.<\/p>\n
Resistance is noted near 1.3652, with a descending trend line from 1.3907 limiting gains. Support sits near 1.3596 from a rising trend line off 1.3366, with 1.3500 as the next level if price closes below support.<\/p>\n
Looking back to early 2025, we saw the GBP\/USD pair under pressure near 1.3600 due to a deteriorating UK job market, where unemployment hit a five-year high of 5.2%. This weakness was a clear warning sign of the economic challenges that would follow over the next year. That period highlighted how sensitive the pound was to signs of a cooling economy.<\/p>\n
Today, those concerns have proven valid, with the UK’s economic situation remaining fragile. The latest data released for January 2026 showed unemployment has edged higher to 5.4%, and wage growth continues to lag behind inflation, which came in at a sticky 3.1%. This puts the Bank of England in a difficult position, unable to cut rates to support growth while inflation remains stubbornly above its 2% target.<\/p>\n
In contrast, the US economy shows more resilience, with the most recent non-farm payrolls report showing a solid addition of 210,000 jobs, reinforcing the case for the Federal Reserve to hold interest rates steady. This policy divergence continues to favor the US dollar over the pound. This fundamental backdrop suggests a continued downward trajectory for the GBP\/USD exchange rate.<\/p>\n
Given this outlook, we believe traders should consider buying GBP\/USD put options to profit from a potential decline in the coming weeks. These options offer a defined-risk way to position for a move towards the 1.2250 support level. This strategy is particularly relevant as the pair currently trades around 1.2410, showing significant depreciation since the warnings seen a year ago.<\/p>\n
Furthermore, the conflicting pressures on the Bank of England between fighting inflation and preventing a deep recession are likely to increase market volatility. We see an opportunity in purchasing straddles ahead of the next major UK data releases or the Bank of England’s policy meeting. This allows a trader to profit from a large price swing in either direction, capitalizing on the current economic uncertainty.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD pares losses near 1.3600 after weak UK jobs data; traders await CPI, key support\/resistance levels.<\/p>\n","protected":false},"author":62,"featured_media":17034,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42077","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42077"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42077\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17034"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}