Pound Sterling vs Dollar: Neutral oscillators and strong ADX confirm limited upside

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Pound Sterling up 0.65% to $1.3362

Highlights

UK ILO Unemployment Rate held steady at 5.2% in January, defying expectations of a rise and signaling labor market firmness.
UK Average Earnings growth slowed sharply to 3.8%, highlighting potential wage pressure despite 84,000 new jobs in the period.
GBP/USD shows broad bearish momentum, with price likely to consolidate between $1.3250 and $1.3400 over the coming week amid negative technical signals.

UK hiring surprise offsets wage drop as Fed signals unclear disinflation pace

The United Kingdom's ILO Unemployment Rate remained steady at 5.2% for the three months ending in January, contrary to expectations of an increase, while UK Average Earnings declined sharply to 3.8% during the same period according to the Office for National Statistics. In this timeframe, the UK labor market saw a gain of 84,000 jobs compared to the previously reported 52,000. Meanwhile, the Federal Reserve maintained US interest rates at 3.50%–3.75% at its March meeting and indicated that inflation is projected to ease gradually, with some uncertainty around the pace of disinflation.

Bearish momentum persists amid negative trend and intraday divergence

Daily momentum is weak as the D1 MACD and ADX both give “Sell” signals, with ADX (35.4) confirming a strong negative trend. RSI (38.6) and CCI (−83.1) both reflect a bearish bias but are not in oversold territory on D1, while Stoch RSI flags “Strong Sell” but sits mid-range, creating a mild divergence among oscillators. The BBP reading is slightly positive (0.0042), signaling that buyers are marginally dominating intraday, although this is at odds with overall momentum and oscillator signals. Awesome Oscillator remains neutral, offering no clear support for the current move. There was a narrow gap higher at the open, and the price is now near today’s high in a $1.3248–$1.3327 range, reflecting moderate volatility and steady strength toward session highs.

Decline likely as technical signals point to bearish weekly outlook

For the next 5 trading days, the expected normalized range is $1.3248 to $1.3495, maintaining the current $1.3362 price within this band and reflecting typical weekly volatility for this pair. The probability of price increase is very low (less than 20%), making a decline much more likely, with all major weekly indicators (RSI-W1, ADX-W1, MACD-W1, MA-50-W1) pointing to a bearish outlook. Baseline scenario sees GBP/USD consolidating between $1.3250 and $1.3400. A bullish case would require a decisive push above $1.3410 with strong follow-through to $1.3495, while a bearish scenario would open up if the pair breaks below immediate support at $1.3360, targeting a retreat toward $1.3250.

Viktoras Karapetjanc, expert at Traders Union, sees GBP/USD trading under broad technical pressure, but notes the UK labor market is showing resilience with unemployment holding steady and solid job gains. He acknowledges that the Fed’s steady policy and disinflation outlook add to the current negative sentiment against the pound. The analyst believes momentum and major weekly indicators favor further GBP weakness, yet constructive fundamentals could underpin stability above $1.3250 barring a clear breakdown. He remains moderately bullish, watching for renewed upside if the pair firmly reclaims $1.3410. "While the technical picture remains bearish for now, I think strong UK fundamentals mean GBP/USD is well positioned for a rebound above $1.3410 if immediate support levels hold."

Earlier, analysts noted that sellers maintained control over GBP/USD, with technical signals favoring a continued bearish outlook. The current setup not only reinforces this negative bias but also highlights a potential downside risk if the pair fails to hold above the $1.3360 support, where sustained selling could accelerate losses toward $1.3250 in the coming sessions.

Source of Data: GBP Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.