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GBP/USD holds steady around 1.3380 as robust US data strengthens the Dollar

GBP/USD holds steady around 1.3380 as robust US data strengthens the Dollar

101 finance101 finance2026/01/16 16:18
By:101 finance

GBP/USD Holds Steady as US Data Limits Sterling's Gains

The British Pound (GBP) is moving sideways against the US Dollar (USD) during Friday's North American trading hours. After touching a session high of 1.3413, the pair has retreated to 1.3380, remaining below the important 200-day simple moving average (SMA) at 1.3405, as robust US economic reports have curbed further advances for Sterling.

US Dollar Strengthened by Strong Employment Figures and Reduced Rate Cut Expectations

Recent US economic releases indicate that while consumer inflation has stabilized, producer prices have continued to climb. The Consumer Price Index (CPI) held steady at 2.7% year-over-year in December, matching November's figure. However, the Producer Price Index (PPI) rose to 3% in November, up from 2.8% the previous month.

The US labor market has also demonstrated resilience. Last week’s Nonfarm Payrolls report, though slightly below expectations, still showed solid job growth. The unemployment rate edged down to 4.4%, just under the Federal Reserve’s 4.5% projection. Additionally, Thursday’s Jobless Claims fell from 207,000 to 198,000, suggesting fewer Americans are seeking unemployment assistance.

As a result, investors have scaled back their predictions for Federal Reserve interest rate cuts, which has provided further support for the US Dollar.

The US Dollar Index (DXY), which measures the greenback against a basket of major currencies, has risen 0.10% to 99.43, putting additional pressure on the Pound.

Sterling Outperforms Euro but Struggles Against Dollar

While the British Pound has strengthened against the Euro, it has failed to gain ground versus the US Dollar. This comes despite data showing the UK economy expanded more than forecast in November 2025. Nevertheless, financial markets are still factoring in at least two 25-basis-point rate cuts from the Bank of England in 2026.

Looking ahead, the UK is set to release key reports on employment, inflation, and retail sales next week. In the US, upcoming data will include housing figures and the Federal Reserve’s preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index for October and November.

GBP/USD Technical Analysis

Short-Term Outlook

GBP/USD has adopted a bearish tone in the near term after breaking below a support trendline established from late November lows on January 6. The pair briefly hovered above the 200-day SMA at 1.3405 before slipping to fresh yearly lows at 1.3366.

If the pair closes below 1.3400 on a daily basis, it could target the 50-day SMA at 1.3334, followed by support at the former November 13 high of 1.3215, and then a trendline support in the 1.3100–1.3150 range.

On the other hand, a move above 1.3400 could see GBP/USD reclaim the 200-day SMA, with the next resistance at 1.3450.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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