GBP/USD Price Forecast: At make or a break near 1.3600

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The GBP/USD pair claws back half of its early losses during the European trading session on Tuesday, but is still 0.23% down to near 1.3600.

GBP/USD recovers half of its intraday losses, which were prompted by weak UK employment data.
The UK Unemployment Rate jumps to 5.2%, the highest level seen in five years.
The Cable trades cautiously near the lower boundary of the Symmetrical Triangle formation.

The GBP/USD pair claws back half of its early losses during the European trading session on Tuesday, but is still 0.23% down to near 1.3600. The Cable faced intense selling pressure as the Pound Sterling (GBP) declined after the release of the United Kingdom (UK) labor market data for the three months ending December, which showed further deterioration in the job market.

The Office for National Statistics (ONS) reported that the ILO Unemployment Rate accelerated to 5.2%, the highest level seen in five years. Economists expected the jobless rate to have remained steady at 5.1%. The number of jobs created during the period was 52K, lower than the prior reading of 82K.

Average Earnings Excluding Bonuses, a key measure of wage growth, dropped to 4.2% Year-on-Year (YoY), as expected, from the previous reading of 4.4%, revised lower from 4.5%. Average Earnings Including Bonuses fell to 4.2% from 4.6% in the three months ending in November.

Going forward, investors will focus on the UK Consumer Price Index (CPI) data for January, which will be released on Wednesday.

Meanwhile, the US Dollar (USD) trades broadly stable ahead of the opening of the United States (US) markets after an elongated weekend.

GBP/USD technical analysis

GBP/USD trades lower at 1.3594 at the press time. Price sits beneath the 20-period Exponential Moving Average (EMA) at 1.3624. The average edges lower, underscoring a soft short-term bias.

The 14-period Relative Strength Index (RSI) at 42 stays below the 50 midline, confirming waning momentum. The descending trend line from 1.3907 caps advances, with resistance near 1.3652. A clear break above that barrier would shift the bias toward recovery.

On the contrary, the rising trend line from 1.3366 underpins the setup, offering support near 1.3596. A close below this base would leave the pair vulnerable to further downside towards the psychological level of 1.3500.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

ILO Unemployment Rate (3M)

The ILO Unemployment Rate released by the UK Office for National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. As a result, a rise leads to a weakening of the UK economy. Generally, a decrease of the figure is seen as bullish for the Pound Sterling (GBP), while an increase is seen as bearish.

Why it matters to traders?

The Unemployment Rate is the broadest indicator of Britain’s labor market. The figure is highlighted by the broad media, beyond the financial sector, giving the publication a more significant impact despite its late publication. It is released around six weeks after the month ends. While the Bank of England is tasked with maintaining price stability, there is a substantial inverse correlation between unemployment and inflation. A higher than expected figure tends to be GBP-bearish.