GBP/USD Tests 1.3500 as NFP Shock Pushes Dollar Lower

GBP/USD tests 1.3500 after weak U.S. jobs data hits the Dollar. See key Fed, UK GDP, and technical levels shaping the British Pound outlook.

GBP/USD is holding near 1.3495 on Monday, gaining around 0.04% as traders assess the fallout from a weak U.S. jobs report. The British Pound remains close to recent highs, but the pair is struggling to establish a decisive break above the psychologically important 1.3500 level.

The U.S. Dollar weakened sharply after Friday’s Nonfarm Payrolls (NFP) report showed the U.S. economy lost 23,000 jobs in July, raising concerns that labor-market momentum is deteriorating. The softer data has reduced expectations for tighter Federal Reserve policy and left the Dollar vulnerable to further selling if upcoming inflation data also disappoints.

Weak U.S. Jobs Data Pressures Dollar

Markets have significantly reduced expectations for a September Federal Reserve rate hike. The probability has fallen to below 45%, compared with roughly 67% a week earlier. That shift has limited the Dollar’s recovery and helped GBP/USD remain close to the 1.3500 threshold.

Still, the Greenback is attempting to stabilize. Geopolitical risks surrounding the Middle East and the Strait of Hormuz remain important for markets, particularly because a rebound in oil prices could revive inflation concerns. Higher energy costs could keep the Federal Reserve cautious about easing policy too quickly.

The next major U.S. inflation readings could therefore determine the pair’s direction. Stronger-than-expected inflation may restore expectations for tighter Fed policy, while softer price pressures could extend the Dollar’s recent decline.

UK GDP Becomes Key GBP Catalyst

Attention is also shifting toward the United Kingdom, where preliminary second-quarter GDP figures are due Thursday. Economists expect the UK economy to expand 0.4% quarter-on-quarter, slowing from 0.6% in the first quarter. June GDP is forecast to fall 0.1% month-on-month after increasing by the same amount in May.

Brown Brothers Harriman expects UK growth momentum to cool, while the Bank of England has projected even weaker second-quarter growth of 0.3%. A disappointing GDP reading could challenge expectations for further BoE tightening and weigh on the Pound.

Key figures for traders include:

• Q2 UK GDP forecast: 0.4%
• Q1 UK GDP growth: 0.6%
• September Fed hike probability: Below 45%
• BoE tightening priced over 12 months: 50 basis points

GBP/USD Technical Levels to Watch

GBP/USD retains a mildly bullish structure on the one-hour chart while trading above its 100-period SMA at 1.3461 and 200-period SMA at 1.3432. The rising support line near 1.3440 also reinforces the current constructive setup.

The RSI is slightly above 60, indicating positive momentum without signaling severely overbought conditions. If buyers secure a sustained move above 1.3509, the next resistance zone could emerge around 1.3558.

On the downside, 1.3461 is the first key support, followed by 1.3440 and 1.3432. A decisive break below the 200-period SMA would weaken the bullish structure and increase the risk of a deeper pullback. For now, GBP/USD remains caught between improving Pound sentiment and uncertainty over the next U.S. and UK economic signals.