British Pound holds steady near mid-1.3400s against weaker USD, awaiting fresh direction from US NFP

• GBP/USD halts its previous day’s pullback from highs last seen in mid-September as USD weakens.
• Falling US bond yields and hopes of diplomacy over Iran leave USD buyers under pressure.
• Ahead of the pivotal US NFP release, the BoE’s hawkish stance lends additional support to GBP.

With the crucial US monthly employment report due, traders appear reluctant to take sizeable positions in GBP/USD. Some buying on dips during Friday’s Asian session has nevertheless halted the previous day’s retreat from just above the psychological 1.3500 threshold, the pair’s highest level since mid-September. Spot prices currently stand just above 1.3450, a modest gain of 0.05% on the day.

Expectations for the US Federal Reserve’s (Fed) December decision will be heavily influenced by the US Nonfarm Payrolls (NFP) report. That reassessment will, in turn, shape demand for the US Dollar (USD) and give GBP/USD fresh direction. Ahead of this significant data release, a recent sharp decline in US bond yields, alongside hopes of diplomacy over Iran, is weighing on the safe-haven USD and providing some underpinning for the pair.

Expectations of political gridlock have increased following the Democrats’ decisive victory in the US midterm elections, potentially constraining government spending and slowing economic growth. Meanwhile, senior Senate Democrat Chuck Schumer pledged on Wednesday to press for an end to the Iran war, prompting a weekly decline of over 10% in crude oil prices. The resulting easing of inflation concerns has helped push US bond yields to a near two-month low, limiting support for the safe-haven USD.

By contrast, the British Pound (GBP) is benefiting from a hawkish turn at the Bank of England (BoE). The central bank raised interest rates for the first time in more than three years and indicated that another increase is likely unless the US-Iran war is resolved. Chancellor John Healey’s 2026 Autumn Budget has also reduced the immediate threat of a runaway fiscal crisis, a development seen as providing further support for GBP and the GBP/USD pair.

Even so, the pair remains on course for a fourth consecutive weekly gain. Given the supportive fundamental backdrop, any corrective decline could attract buying interest and is more likely to prove short-lived.

GBP/USD: daily price chart

GBP/USD Maintains a Constructive Technical Bias

Trading above both its 200-day Simple Moving Average (SMA) at 1.3421 and important Fibonacci support levels, GBP/USD retains a constructive near-term bias. As the recovery from the 1.3138 cycle low continues, the pair is testing a cluster of retracement levels. The immediate obstacle for buyers is the 61.8% Fibonacci level at 1.3470, which is restricting further gains.

If the pair breaks decisively above the 61.8% Fibonacci retracement, the 78.6% level at 1.3560 would become the next objective, followed by August’s swing high of 1.3674, where more substantial supply could materialise. Initial support on a decline lies at the 200-day SMA of 1.3421, with the 50.0% retracement at 1.3406 below it. A more extended pullback would likely put the 38.2% level at 1.3343 in focus.

(The technical analysis of this story was written with the help of an AI tool. Know more.)