GBP/USD Drops to 1.2600 as Traders Await UK Employment Data

GBP/USD Reverses Gains Amid US Dollar Rebound & Risk Aversion

The GBP/USD pair ends its five-day winning streak, retreating towards the 1.2600 level early Tuesday. A broad-based US Dollar (USD) recovery and a cautious risk sentiment are pressuring the British Pound (GBP) ahead of the release of UK labor market data.

Investors are watching the UK employment report, which could provide fresh directional momentum for GBP/USD. Meanwhile, the USD strengthened after easing concerns over Trump’s trade policy, which previously fueled risk-on market sentiment and pressured the greenback.

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GBP/USD Technical Analysis – Key Support & Resistance Levels

📊 Technical Indicators:
✅ RSI Remains Above 60 – Indicates short-term bullish momentum.
✅ Price Holding Near 1.2600 – Bulls need to reclaim this level to extend gains.
✅ Fibonacci Levels Acting as Key Resistance & Support Zones

📈 Resistance Levels to Watch:

• 1.2600 – Interim resistance (psychological level).
• 1.2650 – Next upside target (Fibonacci 78.6% retracement).
• 1.2700 – 1.2710 – Major resistance zone (round level, static resistance).

📉 Support Levels to Watch:

• 1.2530 – First downside support (Fibonacci 61.8% retracement).
• 1.2500 – Psychological round level.
• 1.2450 – Key support (100-period Simple Moving Average).

📊 Now, let’s visualize GBP/USD’s daily trend. 📈

Fundamental Analysis – Key Market Drivers for GBP/USD

📌 US Dollar Rebounds Amid Market Uncertainty

• Last week, USD weakened as risk appetite improved due to receding fears of Trump’s tariff policies.
• However, the USD Index (DXY) has rebounded as caution returns to the market.
• US markets remain closed for Presidents’ Day, leading to thin trading conditions today.

📌 UK Employment Data in Focus

• The UK Office for National Statistics (ONS) is set to release employment data today, which could impact GBP.
• Analysts expect the UK ILO Unemployment Rate (3M) to rise to 4.5% from 4.4%.
• Average Earnings Growth (including bonuses) is forecasted at 5.9%, up from 5.6%.

📌 BoE Governor Bailey’s Trade Comments

• Bank of England (BoE) Governor Andrew Bailey noted that the impact of US tariffs on inflation remains uncertain.
• He emphasized that the gradual disinflation trend is still ongoing.
• GBP traders are watching for any signs of BoE policy shifts following today’s employment data.

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Conclusion – What’s Next for GBP/USD?

The GBP/USD pair remains in a bullish short-term trend, but faces resistance near 1.2600 amid a broad US Dollar recovery. UK employment data will likely provide fresh momentum for the pair.

💡 Market Outlook:
✅ If GBP/USD clears 1.2600, a move towards 1.2650 and 1.2700 could be expected.
✅ A weaker UK labor report may push GBP/USD back to 1.2530 or 1.2500 support zones.
✅ US economic sentiment & risk tone will continue to drive USD demand.

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