GBP/USD trades sideways near $1.34 ahead of UK jobs and inflation data

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Parshwa Turakhiya

19.01.2026

GBP/USD trades sideways near $1.34 ahead of UK jobs and inflation data — GBP/USD holds near $1.34 as dollar weakness offsets fading pound momentum

GBP/USD is trading near $1.34 on Monday, holding modest gains as a softer U.S. dollar counterbalances fading bullish momentum in the pair. The move higher reflects broad-based dollar weakness after Donald Trump renewed tariff threats against European economies, prompting markets to reprice U.S. political risk.

Highlights

GBP/USD trades near $1.34 as dollar softness supports the pair.
Price holds above the 200-day EMA near $1.3295, keeping the medium-term bias constructive.
UK data risk looms with jobs and inflation releases due this week.

With price action showing stabilization rather than acceleration, the pair remains locked in a tactical range rather than breaking into a fresh trend. The early-week resilience follows last week’s pullback and underscores a market leaning on dollar dynamics more than sterling strength. Liquidity remains orderly, and the absence of follow-through buying signals caution ahead of key macro events.

Structure compresses as momentum cools

On the daily chart, GBP/USD remains constructive but increasingly compressed. Price continues to hold above the 200-day EMA near $1.3295, which acts as the medium-term trend anchor. However, the pair is capped below the 20-day EMA around $1.342 and the 50-day EMA near $1.338, reflecting hesitation after the December rebound. Repeated failures to sustain closes above the $1.345-$1.35 band confirm that upside momentum has slowed, even as the broader structure stays intact.

GBP/USD price dynamics (Source: TradingView)

This compression points to consolidation rather than reversal. The market has not invalidated the uptrend that began late last year, but it is no longer extending decisively away from its averages. That dynamic favors patience and selectivity, particularly near resistance.

Momentum indicators reinforce the message. Daily RSI has eased back toward the low 50s from earlier overbought readings. Buyers remain present, yet they are no longer aggressive. The lack of bearish divergence suggests downside pressure is limited for now, but the flattening profile indicates the market is waiting for a catalyst rather than pushing trend continuation on its own.

Intraday behavior aligns with that assessment. On the 30-minute chart, GBP/USD rebounded from last week’s dip into $1.334-$1.335, with short-term trend support lifting toward $1.337. Supertrend and Parabolic SAR have flipped back to the upside, but price action is choppy, marked by shallow pullbacks and limited follow-through. That favors range tactics over breakout chasing while volatility remains contained.

Dollar weakness helps, UK data sets the test

Fundamentals are sending mixed signals. Sterling is benefiting from U.S. dollar underperformance as markets price in higher political risk premia tied to U.S.-EU trade tensions. The tariff rhetoric has weighed on the dollar broadly, lifting several major pairs even as local fundamentals vary.

At the same time, sterling faces its own event risk. UK employment and inflation data are due this week and will shape expectations around the Bank of England policy path. With growth concerns lingering and services inflation still a focus, the data will be critical in determining whether markets lean toward policy patience or renewed tightening bias. Any upside surprise in inflation could revive pound demand, while softer prints may reinforce the current range.

Across the Atlantic, U.S. data flow remains important but secondary to political headlines in the near term. Absent a sharp shift in risk sentiment, the dollar’s tone is likely to stay sensitive to trade developments, keeping GBP/USD supported but capped.

Market outlook

From a tradeability perspective, GBP/USD remains neutral-to-slightly bullish as long as it holds above $1.332-$1.33. A sustained daily close above $1.345 would ease compression and open room toward $1.36, where heavier resistance is expected. That scenario likely requires supportive UK data alongside continued dollar softness.

On the downside, a break below the 200-day EMA would shift the bias lower and expose $1.32, signaling that consolidation has resolved against the pound. Until either boundary gives way, the pair is best viewed as range-bound within a broader uptrend, with disciplined entries favored over momentum trades.

Previously, we noted that GBP/USD’s advance had become increasingly dependent on dollar weakness rather than domestic strength. The current stabilization near $1.34 reinforces that view. With UK data approaching and tariff risks still shaping dollar sentiment, the next directional move should become clearer as macro signals align.

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