**GBP/USD Price Forecast: Dollar Extends Payrolls Weakness, Pound Holds 1.35**
*Original analysis by Tim Clayton, Currency News UK*
The GBP/USD pair continued to consolidate above the important 1.3500 threshold as the US dollar extended its post-payrolls decline. With both UK and US macroeconomic indicators influencing renewed volatility, traders have been closely monitoring fresh cues on central bank policy, economic recovery momentum, and ongoing risk sentiment in global markets.
This comprehensive forecast assesses the latest market drivers for GBP/USD, explores key technical and fundamental developments, evaluates potential mid-term scenarios, and outlines crucial areas to watch ahead.
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**US Dollar Weakness Deepens as Payrolls Disappoint**
The US dollar’s retreat gained momentum following a softer-than-expected US nonfarm payrolls report. Jobs data revealed that the world’s largest economy added notably fewer roles than predicted, dampening expectations for an aggressive Federal Reserve tightening path in the near term.
Key points influencing dollar sentiment:
– **Headline Nonfarm Payrolls Miss:** The US only managed employment growth of 235,000 for the month against forecasts around 750,000, sparking immediate dollar selling.
– **Delta Variant Concerns:** Widespread Delta COVID-19 variant cases likely weighed on hiring, pressuring outlooks for continued robust economic recovery.
– **Federal Reserve Policy Impact:** Weaker jobs data reduced bets on the Fed’s early tapering or raising interest rates, with policymakers likely to err on the side of caution.
– **Market Reactions:** US Treasury yields retreated sharply post-report, with equities and higher-risk assets (including the British pound) finding renewed support.
– **Ongoing Uncertainties:** Although payrolls disappointed, wage growth rose, and unemployment fell marginally. Market participants remain cautious about reading too much into single data points, but the soft jobs report offered some clear near-term relief for GBP/USD buyers.
The dollar index (DXY), which tracks the US currency against a basket of rivals, slumped to multi-week lows following the payrolls release. Speculation shifted toward a potential postponement of any Federal Reserve action, with several major investment banks backtracking from previous forecasts of a September taper announcement.
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**UK Pound Holds Firm Despite Mixed Data and Risks**
The British pound remained resilient, holding above the 1.3500 psychological level despite its own mixed economic backdrop. While UK macro indicators continue to point to recovery, several uncertainties linger, particularly around supply chain constraints, Brexit aftershocks, and risks stemming from coronavirus case trends.
Major themes for GBP support and resistance:
– **UK Service-Sector Recovery:** Recent PMI data confirmed that British services activity expanded at a robust clip—notably above the crucial 50.0 expansion mark—though rates of growth have slowed somewhat from their spring peaks.
– **Labour Market Sentiment:** UK job markets remain strong, with unemployment near pre-pandemic lows and wage growth outpacing inflation.
– **Bank of England Policy Position:** The BoE signaled cautious optimism, hinting that tightening may be warranted in the future should economic progress continue. However, policymakers are keen to ensure recovery is sustainable and not jeopardized by premature policy shifts.
– **Brexit and Trade Concerns:** Ongoing friction over post-Brexit trading rules, most notably the Northern Ireland Protocol, threatens to reignite volatility if talks fail to yield compromise.
– **Pandemic Caution:** While the UK vaccination drive has been among the fastest globally, lingering concerns about surges in infection rates or new variants still pose threats to economic momentum.
The overall resilience of the pound reflects a market willing to look beyond short-term noise, instead banking on a steadier, if cautious, UK recovery. As the US dollar faltered, sterling was given further leeway to trade at the upper end of recent ranges.
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**Technical Analysis: Key GBP/USD Levels in Focus**
GBP/USD price action has been dominated by ongoing swings between
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