During Tuesday's Asian trading session, GBP/USD continued to consolidate with a weak bias for the second consecutive day, though it lacked strong downward momentum, with the exchange rate holding firmly above the 1.3600 level.
Market sentiment remained relatively cautious, as investors refrained from making large bets ahead of key UK data releases. The Office for National Statistics is set to publish the latest monthly employment report.
Market expectations generally point to a continued softening of the UK labor market in early 2026. The number of jobless claims for January is forecast to rise to 22.8K, up from the previous figure of 17.9K, while the unemployment rate for the three months to December is expected to hold steady at 5.1%, near a two-year high.
Additionally, wage growth figures are also under close scrutiny. Both regular pay (excluding bonuses) and total pay (including bonuses) are anticipated to show signs of slowing growth.
Should employment and wage data come in weaker than expected, it would heighten concerns about a UK economic slowdown and reinforce expectations for a 25-basis-point interest rate cut in March, thereby putting downward pressure on the pound.
Following closely will be the UK consumer inflation data due on Wednesday. A further decline in inflation would provide the Bank of England with more room to cut rates; conversely, persistent price pressures could delay expectations for monetary easing.
On the US dollar front, markets are also focused on the FOMC meeting minutes scheduled for release on Wednesday, seeking further clues regarding the Federal Reserve's future interest rate path. Last week's softer-than-expected US inflation data has bolstered market bets for a rate cut in June.
Simultaneously, markets have already priced in the possibility of at least two rate cuts in 2026, coupled with ongoing discussions surrounding central bank independence, which has somewhat dampened bullish sentiment toward the US dollar.
Later in the week, UK retail sales data and preliminary PMI figures from both the UK and the US could also amplify market volatility. Overall, the pound's short-term trajectory will hinge on whether UK data confirms an economic slowdown, while the US dollar remains influenced by evolving expectations for Federal Reserve policy.
From a daily chart perspective, GBP/USD maintains its medium-term upward trend but has recently encountered resistance near 1.3700, leading to a technical pullback. The price is currently trading near the 20-day moving average, with short-term momentum showing signs of weakening.
A break below the 1.3600 psychological level and a sustained drop below the 1.3560 support could lead to a further decline toward the 1.3500 area. Conversely, if the pair stabilizes and rebounds, breaking above the 1.3680 resistance level, it could potentially retest the 1.3700–1.3750 range.
The 4-hour chart indicates a ranging consolidation pattern, with short-term moving averages flattening, the MACD histogram contracting, and the RSI hovering around the 50 level, suggesting a lack of clear directional bias.
The overall technical structure suggests that GBP/USD is consolidating above a key support level, with near-term volatility likely to intensify following the release of economic data.
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