GBP/USD declines as strong US jobless claims counter expectations of BoE rate cuts

Pound Sterling Pulls Back as US Dollar Holds Firm Amid Strong Labor Data

The British Pound slipped by more than 0.11% on Thursday, with the US Dollar maintaining its strength after data showed fewer Americans filed for unemployment than anticipated—a sign that the US labor market remains robust. GBP/USD is currently trading at 1.3544, having earlier peaked at 1.3574 during the session.

US Labor Market Strengthens While UK Faces Political Uncertainty

Market sentiment took a hit following Nvidia Corp’s earnings report and its positive guidance. Despite the ongoing enthusiasm for AI, some investors are questioning whether the rally has gone too far and are seeking more clarity on the sector’s prospects. As a result, major US stock indices have posted declines ranging from 0.28% to 2%.

For the week ending February 21, US initial jobless claims increased slightly from 208,000 to 212,000, still coming in below the expected 215,000. This, along with other recent employment figures, suggests the US job market is stabilizing—a point emphasized by several Federal Reserve officials.

Federal Reserve Governor Stephen Miran reiterated his dovish outlook, expressing support for a 1% reduction in interest rates this year. He noted that “prices appear stable at the moment,” and does not view inflation as a current concern for the US economy.

Meanwhile, in the United Kingdom, Prime Minister Keir Starmer is under scrutiny after appointing Peter Mandelson—who has connections to Jeffrey Epstein—as ambassador to the US.

Upcoming local elections in Gorton and Danton, both in Greater Manchester, could further test Starmer’s leadership. If the Labour Party fails to win, internal pressure for his resignation may intensify, potentially weighing on the Pound Sterling.

Additionally, speculation is mounting that the Bank of England may lower interest rates at its March meeting. Governor Andrew Bailey recently stated that a rate cut is “genuinely open for discussion.”

Bailey also acknowledged that while services inflation remains elevated, economic growth has been lackluster and unemployment rose in the fourth quarter of 2025. These factors have led investors to anticipate further monetary easing from the Bank of England.

According to Prime Market Terminal, money markets are now pricing in an 81% probability of a rate cut at the Bank of England’s March 19 meeting.

Key Events Ahead for GBP/USD Traders

Looking forward, market participants are turning their attention to Friday’s US Producer Price Index (PPI) release and comments from Federal Reserve officials. In the UK, the economic calendar is relatively quiet, with the main highlight being a speech from the Bank of England’s Chief Economist, Huw Pill.

GBP/USD Technical Analysis and Outlook

On the daily chart, GBP/USD is trading at 1.3517, positioned just above a cluster of simple moving averages near 1.3540–1.3535. However, the pair faces resistance from a downward trend line originating at 1.3869, keeping the short-term outlook neutral with a slight bearish bias. The broader uptrend remains supported by a long-term ascending trend line from 1.3035, but repeated failures to break above resistance and a weakening Fed Sentiment Index point to fading bullish momentum and the possibility of a deeper correction if prices fall decisively below nearby averages.

Immediate support is found around 1.3500, aligning with recent lows and just below the ascending trend line. A break below this level could open the door to further declines toward 1.3460 and then 1.3400. On the upside, the descending trend line now serves as initial resistance near 1.3550, followed by last week’s highs around 1.3635 and the 1.3800 area. A sustained move above these levels would be needed to confirm a renewed bullish trend.

(This technical analysis was generated with the assistance of an AI tool.)