GBP/USD remained under pressure for a second day as the US Dollar ticked higher. Still, the pair held above 1.3600 in early Tuesday trading. Markets now await the UK monthly jobs report for near-term direction.
UK Office for National Statistics data is expected to show a softer labour market at the start of 2026. Jobless claims are forecast at 22.8K in January, up from 17.9K previously. The unemployment rate is expected to stay at 5.1% for the three months to December. Wage growth is also seen slowing for both regular pay and total earnings.
Market Focus On Uk Jobs Data
Key Near Term UK Catalysts
Next, attention turns to UK CPI on Wednesday, with markets pricing in a 25 bps Bank of England rate cut in March. The US Federal Reserve’s FOMC minutes are also due on Wednesday, which could shift expectations for the Fed’s rate path and near-term US Dollar demand.
Later in the week, UK Retail Sales on Friday and flash PMIs from the UK and US could add volatility. Softer US consumer inflation last Friday raised the chances of a June rate cut, and markets are pricing at least two Fed cuts in 2026.
The pound is struggling to stay above 1.3600 versus the dollar, a clear change from the 1.3800 area it held for much of late 2025. The near-term focus is today’s UK jobs report. Another jump in jobless claims could break that support. UK unemployment has climbed steadily from 4.2% last year to 5.1%, so markets are alert to any further weakness.
With a soft jobs report expected, traders may consider buying short-dated GBP/USD put options. A strike just below the current level, such as 1.3550, could help protect against a drop after the data. This approach may work because weak employment data would strengthen expectations for a Bank of England rate cut next month.
Volatility Strategy Considerations
Managing Event Risk This Week
This week includes several major event risks, including UK inflation and the FOMC minutes tomorrow. That makes a simple directional trade riskier. A strangle options strategy could be another approach. By buying both an out-of-the-money put and an out-of-the-money call, a trader can benefit from a large move in either direction, no matter what the data shows.
Looking ahead, the Federal Reserve is also expected to cut rates this year, with markets pricing the first move by June. The Fed’s dot plot from December 2025 also pointed to at least two cuts in 2026, which may limit gains in the dollar. This could help put a floor under GBP/USD, meaning any sharp dips this week may not last long.
Create your live VT Markets account and start trading now.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
