The British pound weakened slightly against the US dollar, with GBP/USD retreating to 1.3280 during Monday’s European session. Trading volume remains subdued due to the May Day holiday across European markets, further amplifying price sensitivity to broader macroeconomic cues.
Dollar softness continues to shape FX flows as investors digest lingering uncertainties around US trade policy. Recent fluctuations in market sentiment stem from President Donald Trump’s unpredictable rhetoric, which has undermined investor confidence.
GBP/USD’s latest pullback reflects this cautious environment. On the 4-hour chart, the Relative Strength Index (RSI) remains below 50, highlighting the absence of strong buying pressure. The pair also failed to break above the 50-period Simple Moving Average (SMA), reinforcing technical resistance.
Key Support and Resistance Levels
As traders await fresh catalysts, GBP/USD is consolidating within a narrow range. Technical indicators suggest a potential shift in momentum, depending on upcoming US economic data.
Support Levels:
- 1.3270 – 23.6% Fibonacci retracement, 100-period SMA
- 1.3200 – Static horizontal support
- 1.3165 – 38.2% Fibonacci retracement
Resistance Levels:
- 1.3330 – 50-period SMA
- 1.3400 – Round number, static resistance
- 1.3440 – March swing high
These levels will likely define GBP/USD’s near-term trajectory, with momentum hinging on US labor market data.
US Payrolls and Market Sentiment in Focus
The US Bureau of Labor Statistics is scheduled to release April’s Nonfarm Payrolls (NFP) later today. Analysts expect 130,000 new jobs, down from the stronger-than-expected 228,000 in March.
A print below 100,000 could renew recession fears and weigh on the dollar, potentially pushing GBP/USD higher. Conversely, a robust jobs report may reinforce the greenback’s recent resilience and extend the pair’s downside.
Meanwhile, US stock index futures are up between 0.3% and 0.6%, signaling a bullish open on Wall Street. Notably, the dollar has shown a positive correlation with equity performance—a risk-on rally could add pressure to the pound if capital flows favor the USD.
Key Takeaways:
- Thin trading conditions due to May Day
- GBP/USD vulnerable to US data surprises
- Risk sentiment closely tied to stock movements
Market attention will remain fixed on how these dynamics evolve in the coming sessions, with GBP/USD likely to stay reactive rather than directional until clarity emerges.
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