GBP/USD Price Stalls At 1.3555: Break Above 1.3615 or Sharp Fall Toward 1.3415 Next?
With GBP/USD floating near 1.3555, traders ask: will UK jobs data and US-China trade talks drive a bullish break above 1.3615—or trigger a selloff back to 1.3415? | That's TradingNEWS
Pound Struggles Below 1.3615 As Dollar Sentiment Shifts Amid US-China Trade and UK Jobs Data
GBP/USD continues to orbit near 1.3555 in early European hours, holding slightly above the 100-day EMA. After slipping to 1.3508 on Friday following robust US NFP data, the pair rebounded cautiously. The market remains split between expectations for a retest of the 1.3615 ceiling and fears of a breakdown toward 1.3415 or even 1.3250. The dollar's tone has been erratic, alternating between strength and retreat, with civil unrest in the U.S., upcoming trade talks with China, and a looming UK labor data release all factoring into volatile GBP/USD positioning.
Market Caught Between Bullish Structure and Rising Uncertainty
The technical structure for GBP/USD remains constructive but fragile. RSI remains bullish at 60.50, and the pair is anchored above its 100-day EMA, signaling room for another move toward 1.3615 or higher. But the bullish case requires a clean break above 1.3650—a level capped by Bollinger Band resistance. Beyond that, the path could extend to 1.3748 and 1.3834. However, failure to hold above 1.3500 would unwind momentum fast, exposing downside risks toward 1.3415, then 1.3250, and eventually 1.3110 if sentiment shifts.
Dollar Faces Pressure From Civil Unrest, Trade Tensions, and Capital Flow Worries
Despite a temporary bump from the NFP beat, the dollar faces macro drag. Unrest in Los Angeles and other U.S. cities poses political risk, while U.S.-China trade discussions set to focus on rare earths and semiconductors may further destabilize sentiment. CIBC flagged increasing hedging activity and capital outflow concerns, noting a potential structural revaluation of USD assets if confidence in U.S. institutions continues to erode. Danske Bank downgraded its U.S. growth outlook but stopped short of forecasting recession.
UK Data in Focus: Wage Growth, Jobs, and BoE Response
Markets await UK labor data on Tuesday. Consensus expects a rise in unemployment to 4.6% (up from 4.5%) and slowing wage growth to 5.3% from 5.5%. However, any upside surprise in wages could scuttle hopes of a June rate cut by the Bank of England. MUFG believes a jobs miss could open the door for an August 25 bps cut. BoE Governor Bailey’s cautious tone last week, favoring gradual easing, continues to guide expectations.
Consolidation or Breakout? Sterling Faces Critical Technical and Fundamental Test
Despite ranging between 1.3515 and 1.3575, GBP/USD retains a bullish undertone. A decisive breakout above 1.3650 could invite momentum traders back in, targeting the 1.3748 and 1.3834 highs of early 2022. UOB analysts warn that unless 1.3500 breaks, Sterling retains a short-term upside bias. However, rejection below 1.3415 flips the script bearish quickly. Saxo's Chanana noted that "a deal to keep talking" in U.S.-China talks might stabilize sentiment, but absent a breakthrough, dollar volatility will persist.
Outlook Skews Neutral To Bullish With Caution Required
With GBP/USD trading at 1.3555, the outlook leans slightly bullish given strong support at 1.3500, the lack of downward momentum, and dollar-specific risks. However, this is highly conditional on UK wage and jobs data and any credible outcome from U.S.-China discussions. The pair faces strong overhead resistance at 1.3650, and while upside targets at 1.3748 and 1.3834 remain possible, any disappointment in UK data or strong dollar resurgence could pull the pair toward 1.3415 and lower.
Traders should watch the 1.3500 line closely. If that gives way, a deeper correction could unfold. For now, GBP/USD earns a cautious hold rating with upside potential if macro risks align.
