GBP/USD Price Forecast - Pound Holds Below 1.34 as BoE Cut, Weak Jobs Data and Firm Dollar Clash

GBP/USD: Sterling Stalls Below 1.34 As BoE Cuts Clash With Softening U.S. Inflation

Price structure and resistance levels in GBP/USD

GBP/USD is trading around 1.337–1.338, sitting just under the 1.3400 cap that has repeatedly rejected buyers. Price action through the week has been choppy rather than directional: the pair pushed toward 1.3400, stalled, and faded, signalling hesitation rather than a clean breakout. Structurally, the market is boxed between resistance in the 1.3400–1.3500 band and downside air pockets toward 1.3200 and 1.3000. A sustained move above 1.3500 would force a reassessment, but at current levels GBP/USD looks soft rather than strongly bid.
On the technical grid, 1.3400 is the immediate pivot. Sellers are defending this zone and intraday pullbacks develop quickly once spot gets close. Below, the first meaningful downside objective is 1.3200, with a deeper extension toward 1.3000 if dollar strength accelerates or UK data deteriorates. That leaves GBP/USD trading in roughly a 1.3000–1.3500 range, with current price in the upper third, so you are paying near resistance, not buying a washed-out pound.

Bank of England cuts, UK inflation and labour-market damage

On the sterling side, the driver is the Bank of England pivot. The BoE has already cut rates, yet GBP/USD has not collapsed because the communication was not aggressively dovish. Policymakers eased while stressing that wage expectations remain too high and underlying inflation is still uncomfortably elevated. Headline UK CPI is 3.2%, down from 3.6%, core inflation is also 3.2%, and services inflation sits at 4.4%, all well above the 2% target, which justifies only gradual easing.
The macro problem for the pound is the trend in real activity. Unemployment has risen to 5.1%, the highest since 2021. Payrolled employees are falling year-on-year, vacancies have dropped to roughly 729,000 (below pre-pandemic levels), and youth unemployment is at its highest in over a decade. A weakening labour market plus disinflation is the classic combination that pushes a central bank toward faster cuts. Some desks expect at least two 25 bp cuts in early 2026 while markets only fully price one, which over time erodes sterling’s rate advantage.

U.S. inflation, dollar yields and the other side of GBP/USD

On the U.S. leg of GBP/USD, the latest inflation report showed November price pressures cooling, but not in a way that forces the Federal Reserve into an urgent dovish pivot. Treasury yields remain firm, the dollar has pulled back from peak levels but still holds structural support, and risk assets are digesting prior tightening rather than trading in a new easing cycle. The euro has bounced toward 1.1710 versus the dollar, and USD/JPY is trading near 157.7 even after the Bank of Japan raised rates to 0.75%, the highest level since 1995. The global backdrop is still one of tight financial conditions, not an environment where the dollar is systematically dumped.
This configuration matters for GBP/USD because it limits how far sterling can run on its own story. Even if the BoE cuts more cautiously than the market feared, as long as U.S. real yields stay elevated and dollar funding demand remains solid, rallies in cable toward 1.3500 are vulnerable to profit-taking. The pair is trading inside a global dollar regime that is softening at the margin, not collapsing.

BoJ normalisation, global risk appetite and indirect impact on GBP/USD

The recent BoJ move underlines how markets are treating policy shifts. Tokyo has lifted rates by 25 bp to 0.75%, but real yields in Japan remain sharply negative, and the market’s first reaction was to sell the yen. USD/JPY moved higher, Japanese government bond yields rose, and local equities rallied. Investors are still focused on carry and global risk appetite rather than punishing every central bank that tightens.
For GBP/USD, that means sterling trades in a world where high-beta assets such as the Nasdaq 100 remain broadly supported, while the dollar retains backing from yield differentials. That mix typically caps breakouts in cable once price stretches into heavy resistance zones like 1.3400–1.3500, making trend continuation less reliable and range dynamics more dominant.

Lloyds Bank as a domestic proxy for UK macro risk to GBP

Domestic UK sentiment is visible in Lloyds Banking Group, which functions as a leveraged play on the British consumer and housing market. The stock has rallied roughly 177% over five years and now trades just below £1 per share, with a price-to-earnings ratio near 17 and a price-to-book multiple around 1.2. Those are not distressed levels; they price in a reasonably benign environment and healthy profitability.
That valuation stance carries an implicit warning for GBP. If the labour-market softening accelerates or UK house prices stall, loan losses could rise and sentiment toward domestically exposed banks could flip quickly. With cyclical financials already priced for good news, the pound does not have a deep “value cushion” from equity stress; instead, negative macro surprises would likely hit both bank stocks and GBP/USD simultaneously.

Commodity flows, oil positioning and what they imply for GBP strength

In the broader macro complex, speculative money has turned aggressively bullish on energy. CFTC net long positions in U.S. oil have exploded from 55,000 to 584,000, almost a ten-fold increase. At the same time, gold is trading near $4,350 and silver close to $67.50, signalling strong hedging demand against inflation, policy error and volatility despite a still-firm U.S. dollar and solid bond yields.
When crude, precious metals and crypto all attract capital together, the move is rarely funded from one currency alone. Capital can rotate out of dollars, euros, sterling and others in different proportions and can reverse abruptly. For GBP/USD, this argues for volatile swings rather than a stable trend: commodity-driven risk-on phases can lift high-beta FX, but any risk-off episode or position flush in oil and gold can push investors back into the dollar quickly, leaving sterling exposed if domestic data are weak.