Pound Rebounds as Weak US Jobs Data Supports GBP/USD Recovery
The British pound is showing signs of recovery as the new trading week of October begins, with the GBP/USD exchange rate currently at 1.3237. This rebound comes after the pound hit three-month lows, bolstered by a disappointing US labor market report that weakened the dollar. The US economy added only 29,000 jobs in September, far below the expected 90,000, which has led markets to believe the Federal Reserve may hold interest rates steady in October and consider a move in December.
In the UK, expectations for Bank of England policy tightening have increased, with markets now anticipating around 30 basis points of tightening before the end of the year and 90 basis points by the end of 2027. Bank of England officials, including Governor Andrew Bailey, have hinted at potential rate hikes if energy prices remain high, citing concerns over sustained inflation above target levels. Additionally, political developments have provided support for the pound, as Prime Minister Andy Burnham advocates for stronger UK-EU ties ahead of a summit planned for late November, with discussions also revolving around the possibility of revisiting EU membership.
From a technical standpoint, the GBP/USD pair remains in a downward structure on the H4 chart, with resistance at 1.3303 and key support at 1.3201. The market is expected to continue its decline, targeting 1.3180, with further potential drops to 1.3108 and 1.3044 if the level is breached. The MACD indicator supports this bearish outlook, although a short-term correction is possible. On the H1 chart, the pair has resumed its downward momentum after a corrective rise, with support at 1.3185 and resistance at 1.3252. The Stochastic oscillator indicates strong selling momentum, suggesting a technical pause or slight correction around 1.3185.
The overall outlook for GBP/USD remains bearish below the key levels of 1.3252 and 1.3303. While a return above 1.3252 could ease short-term selling pressure, it would not alter the broader bearish structure. The 1.3303 level remains critical as the invalidation point for the current bearish scenario.