The GBP/USD currency pair has experienced a third consecutive day of declines, though downward momentum remains restrained. Elevated geopolitical tensions, notably the recent US military operations against Venezuela, have bolstered the US dollar’s status as a safe-haven currency, reinforcing its outperformance against the British pound. These geopolitical developments, along with ongoing conflicts involving Russia and Ukraine, Iran, and the Gaza region, add layers of uncertainty that tend to support USD strength in times of global unrest.
Despite these tailwinds for the US dollar, the recent price action suggests that the USD’s gains may be limited ahead of upcoming economic data from the United States. Expectations that the Federal Reserve may adopt a more dovish stance—anticipating potential rate cuts as early as March—have kept the dollar’s rally somewhat restrained. Recent labor market reports, such as the ADP private-sector employment figures and JOLTS data, have painted a mixed picture, with job creation slowing and labor demand declining. Meanwhile, the ISM Non-Manufacturing PMI showed growth in services activity, signaling resilience in the US economy, but market participants remain cautious as they await the crucial Non-Farm Payrolls report due on Friday.
Market sentiment remains cautious with respect to aggressive dollar long positions, as traders look for clearer signals regarding the Fed’s monetary policy outlook. Additionally, the Bank of England’s slightly less dovish tone could provide some support to the pound, preventing deeper declines against the dollar. The GBP/USD pair continues to trade below key resistance levels, with a potential rebound contingent upon sustained stabilization of momentum indicators and a break above near-term support levels.
From a technical perspective, the pair is holding above the 200-period moving average, which currently acts as a guide for a possible medium-term bullish bias. Momentum indicators show signs of weakness, but unless momentum withers further, the pair could maintain its current range until further economic data provide fresh cues. The forthcoming US employment data will be pivotal in shaping the next phase of directional movement for GBP/USD .
