Over the past 24 to 48 hours, GBP/USD experienced a sharp decline, dropping below yesterday’s closing price of 1.35642 and hitting its lowest level since February 6. The primary catalyst behind this drop was the latest UK employment data, which revealed unemployment hitting a five-year high and slowing wage growth, reinforcing market expectations for further Bank of England rate cuts.

This news heightened concerns about the UK economic outlook, leading investors to lose confidence in the pound, thus putting downward pressure on the GBP/USD exchange rate. Additionally, ongoing global risk appetite concerns have contributed to a more cautious trading environment. Meanwhile, the US Dollar Index (DXY) remained firm ahead of the Federal Reserve’s FOMC minutes, further weighing on the pound.

For the average investor, this scenario highlights how economic fundamentals directly influence currency values. Rising unemployment and slower wage growth signal an economic slowdown, prompting central banks to consider interest rate cuts to stimulate growth, which typically depresses the currency’s value. Recent weak UK economic data has therefore ramped up market bets on Bank of England rate cuts, driving GBP/USD lower.

Daily Chart

The daily chart of GBPUSD reveals a longer-term uptrend transitioning into a recent corrective phase. After hitting resistance near 1.3850, the price has retraced back towards the 1.35 region. The 50-day and 200-day moving averages remain in bullish alignment, but price dropping below the 50-day MA suggests waning short-term momentum. Bollinger Bands are tightening, signaling reduced volatility, while the MACD histogram shrinks with the fast line approaching the slow line from above, hinting at deeper correction or sideways consolidation ahead.

1H Chart

The hourly chart over the past 3-5 days displays increased GBPUSD price volatility around the 1.36 support level, which has been repeatedly tested but not convincingly reclaimed. Short-term indicators like the 20-EMA exert downward pressure as prices meet and retract from the upper Bollinger Band line. A recent bearish engulfing candlestick signals strengthening sellers and potential continuation of the short-term bearish bias. MACD remains below zero with the fast line trending downward, confirming persistent bearish momentum.

Technical Trend:  Short-term cautiously bearish with overall price consolidating in a range; upcoming economic data will determine the next directional move.

Technically, GBPUSD is showing signs of short-term weakness despite a longer-term bullish backdrop. Indicators such as the MACD bearish crossover and a bearish engulfing candlestick pattern confirm increased selling pressure. No major breakout patterns have yet emerged, so attention should be paid to the critical support near 1.35 and resistance at 1.36. A decisive break below 1.35 could accelerate technical selling and open the way for further declines.

Today’s GMT+1 economic calendar highlights the release of key UK inflation figures at 08:00 including the Consumer Price Index (CPI) and Core CPI for January. These figures are highly relevant for GBPUSD, as higher than expected inflation could support the pound and reduce rate cut bets, while lower or in-line data may add to downside pressure. Additionally, important US data such as building permits and durable goods orders will be released later, impacting the USD and indirectly influencing GBPUSD. Traders should closely monitor these releases for potential volatility triggers.

Resistance & Support

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