During Friday’s North American session, the GBP/USD pair is consolidating sideways near 1.3380. Although Sterling reached a daily high of 1.3413 earlier, its gains were limited by robust US economic data released throughout the week. The pair is currently trading below the significant technical barrier of the 200-day SMA located at 1.3405.
US Dollar buoyed by strong data and reduced Fed cut bets The Greenback is finding support from solid US data, which has caused traders to scale back expectations for Federal Reserve interest rate cuts. This week’s inflation data was mixed: the annual Consumer Price Index (CPI) for December held steady at 2.7%, while the Producer Price Index (PPI) for November accelerated to 3%, up from the previous 2.8%.
Furthermore, the labor market remains resilient. Following a respectable Nonfarm Payrolls report last Friday—where the Unemployment Rate dropped to 4.4%, besting the Fed’s 4.5% forecast—Initial Jobless Claims on Thursday fell from 207K to 198K, indicating fewer unemployment filings.
Consequently, markets have adjusted their outlook for Fed easing, pushing the US Dollar higher. Data from Prime Market Terminal indicates that investors are now pricing in only 44 basis points of cuts by year-end, down from a previous peak of nearly 60 basis points
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, climbed 0.10% to reach 99.43, creating pressure on Sterling. Conversely, the British Pound gained ground relative to the Euro but failed to do so against the US Dollar, despite data revealing better-than-expected UK economic expansion in November 2025. Notwithstanding this positive growth data, money market pricing still reflects expectations for a minimum of two 25 basis point interest rate cuts from the Bank of England in 2026. Looking ahead to next week, the UK economic calendar will highlight employment, inflation, and retail sales figures. Across the Atlantic, the US docket will feature housing data alongside the Federal Reserve’s preferred inflation metric, the Core Personal Consumption Expenditures (PCE) Price Index for October and November.
GBP/USD Price Forecast: Technical perspective
The short-term technical outlook for GBP/USD shifted bearish following the January 6 breach of a support trendline originating from late November’s lows. After that break, the pair briefly consolidated just above the key 200-day SMA located at 1.3405, before plunging beneath that level to mark fresh yearly lows at 1.3366.
Looking ahead, securing a daily close below 1.3400 would open the door for a test of the 50-day SMA at 1.3334. Subsequent downside targets include the November 13 high-turned-support level at 1.3215, followed by a support trendline zone between 1.3100 and 1.3150.
On the flip side, if GBP/USD manages to climb back above the 1.3400 handle, traders will likely aim to reclaim the 200-day SMA, with the next resistance target sitting at 1.3450.
