GBP/USD Price Forecast - Pound Struggles Near 1.3150 as U.S. Jobs Collapse, Shutdown, and BoE Dovish Tone Clash

GBP/USD (British Pound vs US Dollar) Battles 1.3150 Resistance as Shutdown, Jobs Slump, and BoE Caution Shape a Volatile November

GBP/USD traded near 1.3148, recovering slightly from a daily low of 1.3094, as traders digested a mix of U.S. political paralysis, weak job data, and the Bank of England’s dovish stance. The pair gained 0.10% intraday, but remains locked in a fragile consolidation after failing to reclaim the 200-day SMA at 1.3261. The tone across markets reflects deep uncertainty — with the U.S. Dollar Index (DXY) oscillating around 99.85, down from a six-month high at 100.36, and the Fed’s gradual tone limiting bullish conviction for the greenback.

Dollar Weakness Fueled by Jobs Collapse and Shutdown Drag

The U.S. labor market shocked traders after firms cut 153,000 jobs in October, marking the largest single-month drop in two decades. The release confirmed a slowing economy, reinforcing expectations that the Federal Reserve (Fed) will deliver another rate cut in December 2025. Fed Vice Chair Philip Jefferson cautioned that rate reductions must proceed “slowly” as policy nears neutral, but admitted that the shutdown’s data blackout makes policymaking “meeting by meeting.”
At the same time, the University of Michigan’s Consumer Sentiment Index plunged to 50.3 from 53.6, missing expectations. Inflation expectations climbed to 4.7% (1-year), while 5-year expectations slipped to 3.6%. The White House Council of Economic Advisers warned GDP could shrink by 1.0–1.5% this quarter if the shutdown persists, amplifying downside risks for the USD.

Sterling Faces Its Own Struggles: BoE’s 4% Dovish Hold and Economic Fatigue

Across the Atlantic, the Bank of England (BoE) voted 5–4 to maintain interest rates at 4.00%, signaling growing discomfort with tightening amid weak domestic demand. Governor Andrew Bailey flagged a “softening labor market” and “waning wage momentum,” warning inflation progress may stall in early 2026.
UK GDP growth projections hover near 0.2% QoQ, while consumer spending remains flat, pressuring Sterling (GBP) sentiment. Markets have now priced in two rate cuts for H1 2026, a shift that undermines the Pound’s earlier resilience. Despite a short-lived rally to 1.3160, the GBP/USD pair remains technically capped below the descending trendline at 1.3180, with sellers defending that zone aggressively.

Shutdown Fallout and Fed Messaging Cap USD Recovery

The DXY index’s recovery to 99.85 is tepid compared with October’s rally. The extended U.S. government shutdown — now the longest in history — continues to choke federal output data and consumer confidence. The University of Michigan survey reported that over 60% of respondents expect worsening personal finances if the shutdown lingers.
The Fed’s mixed tone compounds the dollar’s volatility. St. Louis Fed President Musalem acknowledged inflation’s persistence but projected tariff-driven pressures will fade by next year. His comments, coupled with Jefferson’s caution, leave traders unsure if the Fed will pivot aggressively or stay restrained through December.

GBP/USD Technical Breakdown: Resistance at 1.3180, Support Near 1.3000

Technically, GBP/USD (FX:GBPUSD) remains entrenched in a short-term bearish structure. The pair trades below its 50-day EMA at 1.3150, which continues to act as dynamic resistance. The RSI at 45 shows momentum loss following the late-week rebound, suggesting upside exhaustion near 1.3180.
Key resistance zones remain 1.3150–1.3180 and 1.3240 (trendline cap). On the downside, 1.3040 and 1.2980 mark primary support, with 1.3000 acting as a psychological anchor. A decisive breakdown below that level opens the path to 1.2920 — levels not seen since April. Conversely, a daily close above 1.3240 would invalidate the bearish bias and invite a move toward 1.3330–1.3400.

Cross-Currency Performance: Pound Mixed Against Majors

This week’s heat map shows GBP as the strongest versus the NZD (+2.22%) but weaker against JPY (-0.52%) and CHF (-0.13%). Against the USD, Sterling is modestly higher (+0.16%), reflecting a fragile equilibrium.
The USD/CAD pair lost 0.27%, while EUR/USD gained 0.22%, showing that broad dollar weakness stems from U.S. domestic issues rather than foreign strength. Sterling’s underperformance against low-yielders like CHF highlights how rate expectations, not macro growth, dominate short-term flows.

Political Paralysis and Market Psychology

The extended U.S. political stalemate has heightened risk aversion, pulling Treasury yields lower. The 10-year yield slipped to 4.03%, while the 2-year note trades near 4.38%, reflecting the market’s conviction that a Fed cut is imminent. The shutdown cost is estimated at $9.4 billion per week, adding a cumulative drag that weakens dollar appeal even as investors hedge with gold and yen.
For GBP/USD, these conditions favor short-lived rallies, as neither side offers a convincing growth trajectory. The Pound’s correlation with global risk sentiment has risen to 0.71, meaning Sterling now moves more like a “risk asset” than a traditional safe-haven currency.

Technical Sentiment and Forward Bias

The 200-day SMA (1.3261) defines the upper limit of recovery potential. Below, the 21-day EMA near 1.3115 acts as short-term pivot. MACD differentials show a weakening bear trend, but without volume confirmation, bulls remain cautious. A daily close above 1.3180 could trigger stop hunts up to 1.3240, but sustained pressure near 1.3040 suggests sellers maintain control.
Intraday volatility remains elevated — the 14-day ATR at 0.0062 (≈62 pips) reflects strong two-way activity, typical during macro uncertainty.

Macro Divergence: UK vs US Growth Outlook

The macro divide between the UK and US continues to guide positioning. The UK economy is barely expanding, with manufacturing PMI at 49.2 (contraction zone) and services PMI at 51.1, signaling stagnation. Meanwhile, the US ISM Services Index fell to 49.8, the first sub-50 print since May 2024, showing synchronized slowdown on both sides of the Atlantic.
However, the Fed’s potential December cut versus the BoE’s 2026 easing window could temporarily favor Sterling, explaining why GBP/USD hasn’t broken decisively below 1.3000 despite persistent selling.

Market Outlook and Forward Guidance

Liquidity remains thin due to the US Veterans Day holiday, amplifying swings. Institutional traders anticipate volatility spikes around the upcoming UK GDP release and BoE testimony, which could redefine short-term rate pricing.
Derivatives positioning shows GBP/USD futures net shorts decreased by 6,000 contracts, indicating some profit-taking among dollar bulls. Options skew data reveal implied volatility at 7.8%, the highest in four months, with a risk reversal of +0.24 favoring calls, suggesting hedgers see limited downside in Sterling.

Verdict: SELL / BEARISH — GBP/USD (FX:GBPUSD)

Despite near-term rebounds, GBP/USD remains structurally weak below 1.3180, with downside targets near 1.3040 and 1.2980. The macro landscape — including weak US jobs, a prolonged government shutdown, and BoE’s dovish bias — supports intermittent volatility but not sustained strength.
The pair is expected to trade between 1.2980–1.3240, with rallies offering selling opportunities. Momentum remains bearish until a daily close reclaims the 200-day SMA (1.3261) with volume confirmation.

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