The pound rebounded against the dollar after UK jobs data was released.
2026-01-20 11:39:13
During Tuesday's Asian trading session, the British pound (GBP/USD) traded in a narrow range around 1.3430, lacking further momentum after a slight gain in the previous session.
Investors remained cautious ahead of key UK economic data releases. Market focus was initially on the UK employment report. Expected data showed the ILO unemployment rate for the three months to November would fall to 5.0% from 5.1%, but would still remain near its highest level since 2021; average wage growth, including bonuses, was projected to slow to 4.6% from 4.7%.
Employment and wage performance will directly influence the Bank of England's assessment of the path of inflation and interest rates. The UK's December Consumer Price Index and retail sales figures, to be released later this week, are equally crucial. If inflation stickiness exceeds expectations, it could weaken market bets on further interest rate cuts by the Bank of England, thereby boosting the pound.
Regarding the US dollar, trade concerns stemming from the Greenland issue put pressure on it. The US plans to impose tariffs on goods from several European countries starting February 1st, and the EU has indicated it will strengthen coordination and prepare countermeasures, fueling market concerns about broader economic friction.
Foreign exchange strategist Helen Grant said, "Trade uncertainty has diminished the risk appetite premium for the dollar, while the pound is more susceptible to expectation gaps during data windows."
However, the resilience of the US job market has significantly postponed expectations of a Federal Reserve rate cut, providing medium-term support for the dollar. Several Fed officials emphasized that there is no urgency for further easing until inflation clearly returns to the 2% target.
Morgan Stanley analysts noted, "We have revised our 2026 rate cut schedule to one in June and one in September, instead of the previously expected one in January and one in April. This means the dollar's interest rate advantage may last longer." This change has limited the upside potential of the pound against the dollar, causing the exchange rate to fluctuate more within a range rather than show a trending rebound.
From a daily chart perspective, GBP/USD is generally in a range-bound, slightly bullish pattern, but lacks a breakout. The price has found support above 1.3400 multiple times, but significant resistance exists in the 1.3480-1.3500 area, indicating that the bulls have not yet fully taken control.
In terms of technical indicators: The RSI is running around 52, which is in the neutral to slightly bullish zone, indicating moderate momentum; the 5-day and 10-day moving averages are trending flat and have not yet formed a clear divergence; the MACD is close to the zero axis, and the histogram shows limited changes, indicating insufficient trend strength.
At key levels, if the exchange rate can effectively hold above 1.3480, it is expected to further test the 1.3560-1.3600 range; if it falls below 1.3380 again, it may retrace to the 1.3320 support level. Overall, the daily chart still shows a range-bound consolidation pattern, awaiting data catalysts.
Editor's Note:
The pound's current performance reflects a tug-of-war between UK data expectations and the US dollar's policy path. Employment and inflation will determine whether the Bank of England continues to cut interest rates, while trade concerns are temporarily weakening the dollar.
GBP/USD is expected to fluctuate around 1.34 before key data is released. Pay close attention to the risk of unexpected surprises in wages and CPI.
Investors remained cautious ahead of key UK economic data releases. Market focus was initially on the UK employment report. Expected data showed the ILO unemployment rate for the three months to November would fall to 5.0% from 5.1%, but would still remain near its highest level since 2021; average wage growth, including bonuses, was projected to slow to 4.6% from 4.7%.
Employment and wage performance will directly influence the Bank of England's assessment of the path of inflation and interest rates. The UK's December Consumer Price Index and retail sales figures, to be released later this week, are equally crucial. If inflation stickiness exceeds expectations, it could weaken market bets on further interest rate cuts by the Bank of England, thereby boosting the pound.
Regarding the US dollar, trade concerns stemming from the Greenland issue put pressure on it. The US plans to impose tariffs on goods from several European countries starting February 1st, and the EU has indicated it will strengthen coordination and prepare countermeasures, fueling market concerns about broader economic friction.
Foreign exchange strategist Helen Grant said, "Trade uncertainty has diminished the risk appetite premium for the dollar, while the pound is more susceptible to expectation gaps during data windows."
However, the resilience of the US job market has significantly postponed expectations of a Federal Reserve rate cut, providing medium-term support for the dollar. Several Fed officials emphasized that there is no urgency for further easing until inflation clearly returns to the 2% target.
Morgan Stanley analysts noted, "We have revised our 2026 rate cut schedule to one in June and one in September, instead of the previously expected one in January and one in April. This means the dollar's interest rate advantage may last longer." This change has limited the upside potential of the pound against the dollar, causing the exchange rate to fluctuate more within a range rather than show a trending rebound.
From a daily chart perspective, GBP/USD is generally in a range-bound, slightly bullish pattern, but lacks a breakout. The price has found support above 1.3400 multiple times, but significant resistance exists in the 1.3480-1.3500 area, indicating that the bulls have not yet fully taken control.
In terms of technical indicators: The RSI is running around 52, which is in the neutral to slightly bullish zone, indicating moderate momentum; the 5-day and 10-day moving averages are trending flat and have not yet formed a clear divergence; the MACD is close to the zero axis, and the histogram shows limited changes, indicating insufficient trend strength.
At key levels, if the exchange rate can effectively hold above 1.3480, it is expected to further test the 1.3560-1.3600 range; if it falls below 1.3380 again, it may retrace to the 1.3320 support level. Overall, the daily chart still shows a range-bound consolidation pattern, awaiting data catalysts.
Editor's Note:
The pound's current performance reflects a tug-of-war between UK data expectations and the US dollar's policy path. Employment and inflation will determine whether the Bank of England continues to cut interest rates, while trade concerns are temporarily weakening the dollar.
GBP/USD is expected to fluctuate around 1.34 before key data is released. Pay close attention to the risk of unexpected surprises in wages and CPI.
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