GBP/USD H4 CHART ANALYSIS GBP/USD extended its losses for the second day running on Tuesday, sliding to a fresh one-week low near the middle of 1.3500s during the early European session. The release of the UK jobs report, disclosing a few worrying signs in the labor market, was behind the move down. The Office for National Statistics (ONS) reported that the ILO UK Unemployment Rate rose to 5.2% in the three months to December, compared with 5.1% in the previous month. This is the highest rate of unemployment since early 2021. Furthermore, jobless claims rose by 28.8K in January, further pointing to the UKs labor market losses at the beginning of 2026. Besides, the wage growth number has also diminished considerably. In Q4, the increase in Average Earnings Excluding Bonus was 4.2%; the previous quarters figure was 4.6%. At the same time, the measure including bonuses also fell to 4.2% from 4.6%. Predictably, the Bank of England (BoE) rate cut expectations for March have been gathering pace, thereby causing the British Pound to fall further. However, the US Dollar (USD) has moved up to a one-week high; thus, additional downward pressure has been put on the GBP/USD pair. The recent strength of the USD is mainly due to a general change in market sentiment; its upside momentum, however, is limited by the dovish Fed (Federal Reserve) expectations. Last Friday, softer US consumer inflation figures were released; as a result, traders have increased bets that the Fed will cut interest rates in June. Furthermore, market pricing indicates that the odds of having at least two rate cuts in 2026 are higher, which, together with worries about the threats to the Feds independence, limits the USDs potential rise. Traders are still cautious and are waiting for more clarity regarding the Feds rate cut path before taking directional bets. Consequently, attention will continue to be on the publishing of the FOMC Minutes and the important US PCE Price Index, which are scheduled for Wednesday and Friday, respectively. The Feds policy outlook is expected to be a major factor influencing USD price dynamics. Besides that, the UK Consumer Price Index (CPI) that is due on Wednesday may cause some volatility and give a new push to the GBP/USD pair later in the week. On Thursday, GBP/USD revised the decline towards 1.3500 after losing the recovery momentum. The drop happened as the US Dollar got new strength on the back of cautiousness over the US, Iran nuclear shows, and the still unresolved US trade policy issues, and these risk sentiment concerns are dragging the factors. Nevertheless, the GBP/USD pair still finds some support close to the 200-period Simple Moving Average (SMA) on the 4-hour chart, which is currently around the 1.3550 level. This spot has been a turning point for the short-term traders, and it may result in further downward moves when there is a break below it. The Moving Average Convergence Divergence (MACD) histogram is still negative, the MACD line is below the Signal line near the zero level, thus the selling pressure is still dominating. Also, the RSI is at 40, a neutral to bearish standing, meaning that any rallies will be weak and temporary. If GBP/USD can stay above the rising 200-period SMA, the short-term bias will still be bullish; however, a close below it would mean that sellers are taking control. A move of the MACD histogram into positive territory might indicate that bears pressure is lessening, whereas the RSI should go back above 50 to make the recovery look more convincing. The RSI implies that it needs to be below 50 to restrict the rallies and turn the focus on building a base instead of making a sustainable move higher. To sum up, the outlook for GBP/USD is still mainly driven by the combination of weaker UK labor market data, the expectation of a BoE rate cut, and mixed USD factors. The immediate focus will be on the US and UK economic data releases, especially the inflation reports, which may provide new signals for the pair. At present, the 200-period SMA around 1.3550 is crucial for monitoring, and the market will be very responsive to any changes in sentiment or policy expectations that may determine the next move.
