Trading in the British pound against the US dollar (GBP/USD) was light on Thursday morning in European trading, with the pair trading in a narrow range around 1.3465. With several key US macroeconomic data releases scheduled for this week, market risk appetite cooled, and traders generally opted to wait and see, awaiting clearer policy and economic signals.

From a data perspective, the US will release its initial jobless claims data on Thursday, while the December non-farm payrolls report, to be released on Friday, will undoubtedly be the focus this week. The market generally expects the US to add approximately 60,000 jobs in December, with the unemployment rate potentially falling slightly from 4.6% in November to 4.5%.

Stronger-than-expected employment data could weaken market bets on further interest rate cuts by the Federal Reserve, thus supporting the dollar and suppressing the pound. However, recent dovish signals from Fed officials have limited the dollar's upside potential to some extent.

Federal Reserve Governor Stephen Milan stated that more aggressive interest rate cuts are necessary this year to maintain economic growth momentum. Minneapolis Fed President Neel Kashkari also pointed out that there are significant upside risks to the unemployment rate.

These statements reinforced market expectations that the Federal Reserve's monetary policy would shift towards easing, providing some support for the pound against the dollar.

In the UK, despite inflation remaining significantly above the central bank's 2% target, the Bank of England (BoE) is widely expected to adopt a gradual easing path in 2026. The market currently anticipates at least one rate cut by the BoE in the first half of the year, and has priced in nearly a 50% chance of a second rate cut this year.

This relatively mild policy expectation helps to buffer the downward pressure on the pound.

From a daily chart perspective, the GBP/USD pair remains within a medium-term upward channel, holding firmly above several key moving averages, indicating that the trend foundation has not been broken. Recent consolidation below the 1.35 level suggests increasing divergence between bulls and bears.

In terms of technical indicators, the RSI is above 50 but momentum is slowing, reflecting a cooling of short-term upward momentum. If the price breaks through and holds above the 1.3500 level, it is expected to open up further upside potential; conversely, if it falls below the support around 1.3400, it may retest the lower edge of the previous trading range.

Editor's Note:

The pound is currently in a typical "data waiting period" against the dollar, with short-term movements driven more by expectations than by trends. The prospect of a Federal Reserve rate cut and the actual performance of US employment data will determine the dollar's directional choice; while the Bank of England's relatively cautious easing pace provides some stability for the pound.

Before the non-farm payroll data is released, the exchange rate is likely to remain volatile at a high level. If the data deviates significantly from expectations, the volatility may increase rapidly.