The GBP/USD pair starts the new week on a positive note and is trading around the 1.2940-1.2945 zone during the Asian session, or a four-month high recorded on Friday. Moreover, bearish sentiment surrounding the US dollar (USD) supports the prospects of extending last week’s breakout momentum above the all-important 200-day simple moving average (SMA).
In fact, the US Dollar Index (DXY), which tracks the US dollar against a basket of currencies, is hooting near its lowest level since early November in reaction to weaker monthly employment details in the US on Friday.
Major nonfarm payrolls data showed the U.S. economy added 151,000 jobs in February, below consensus estimates. In addition, the previous month’s reading revised to 125K jobs, and the unemployment rate unexpectedly rose to 4.1% from 4.0% in January.
This comes on the heels of concerns that US President Donald Trump’s policies will affect economic activity in the US and suggests that the Federal Reserve (Federal) remains on track to cut interest rates several times this year. Markets are currently considering about three rate cuts of 25 basis points each this year, which continues to put pressure on the dollar and support the GBP/USD pair.
The US dollar bulls failed to get any rest from comments by Fed Chairman Jerome Powell that the US central bank is in no hurry to cut interest rates.
On the other hand, the British pound (GBP) supports expectations that the Bank of England (BoE) will cut interest rates more slowly than other central banks, including the Fed.
GBP heading towards 1.3000, dollar under pressure
GBP/USD advanced above the 200-day SMA at $1.2786, which now represents a support level, still targeting the $1.3000 area.
Chris Turner, foreign exchange analyst at ING Bank, noted that the GBP/USD pair has risen due to Europe’s financial reclassification.
EUR/GBP is expected to settle at 0.8350/0.8400. This development has not significantly impacted the pricing of the Bank of England’s easing cycle this year, as the market continues to price in interest rate cuts of 50-60 basis points. The next significant domestic input to the UK story comes at the Bank of England meeting on March 20 (no change expected) and the March 26 spring statement from Chancellor Rachel Reeves – which we see as a negative event threatening the pound sterling.”
Before that, we may see the EUR/GBP consolidating at the 08350/8400 zone. The risks here appear evenly tilted to rise with more positive developments from Europe/ECB repricing or to lower with a refocus on impending tariffs. For GBP/USD, the rally looks more difficult and may have difficulty breaking through the resistance at 1.2925/3000 in the short term.
It turns out that this is another factor that contributes to the tone of supply around the GBP/USD pair and proves the positive outlook. In the absence of any market-moving economic releases, whether from the UK or the US, the US dollar will continue to influence spot prices and allow traders to seize short-term opportunities.
Traders will be keeping a close eye on this week’s inflation data, which could determine the dollar’s direction in the near term. The CPI report, due on March 12, is expected to show a slight slowdown in price pressures.
GBP on an upward trajectory
The British Pound (GBP/USD) remains on an upward trajectory, currently trading at $1.2912. The pair was respecting an ascending channel, indicating continued bullish sentiment. There is immediate resistance at $1.2944, with $1.3013 likely to be targeted in any breakout above that.
The 50-day EMA at $1.2851 offers strong near-term support, while the 200-day EMA at $1.2693 provides long-term stability. If GBP/USD fails to hold above the $1.2868 pivot zone, a retreat to $1.2803 could be on the horizon.
Given the current momentum, the bias remains bullish as long as the price remains above the 50-day exponential moving average. However, traders should keep an eye on potential take profits near resistance levels.
The US dollar index (DXY) continues to decline as markets increasingly prepare for a rate cut by the Fed later this year. Recent economic data pointed to signs of labor market weakness, reinforcing expectations of monetary easing.
The latest nonfarm payrolls report showed that the U.S. economy added 151,000 jobs in February, which is 159,000 below expectations and reflecting a slowdown from the 125,000 downwardly adjusted jobs in January. Meanwhile, the unemployment rate rose to 4.1%, the highest level in nearly two years, raising concerns about labor market resilience.
Federal Reserve Chairman Jerome Powell stressed that policymakers are “in no hurry” to adjust interest rates, stressing the need for more clarity on economic conditions. However, his measured stance contrasts with growing market sentiment that the Fed may need to act sooner than expected. As a result, the dollar remains under pressure, burdened by speculation of impending rate cuts.
