GBP/USD traded near 1.3640 in early European trading on Monday. Moves were muted as traders waited for UK labour market data due on Tuesday. The key period is the three months to December. The ILO Unemployment Rate is expected to stay at 5.1%, while Average Earnings Including Bonuses are forecast to rise 4.6% year on year.
Earlier this month, the Bank of England kept its policy rate unchanged at 3.75%. The vote split 5–4. The Bank also repeated that policy is likely to follow a “gradual downward path”.
Uk Data In Focus
In the US, the Dollar was broadly steady after January inflation cooled more than expected. Expectations for the Federal Reserve’s March and April meetings were largely unchanged.
From a technical view, GBP/USD was near 1.3648 and stayed above the 20-day EMA at 1.3619. The 20-day EMA is now flat. The 14-day RSI is around 55 after slipping from previously overbought levels.
Price action has tightened into a symmetrical triangle. Resistance sits near 1.3675, while support is close to 1.3600.
GBP/USD is also described as trading quietly around 1.2650 ahead of tomorrow’s UK labour report. This mirrors the calm trading seen in early 2025, when the pair also moved sideways before a major release. It suggests traders are waiting for fresh data before choosing a direction.
Options Market Volatility
Markets expect the UK unemployment rate for the three months to December 2025 to hold near 4.2%. The main focus is wage growth, forecast at 5.7%. The Bank of England is watching wages closely because they can keep inflation high. If wages come in well above expectations, it could make it harder for the BoE to cut its 4.5% Bank Rate in the months ahead.
Meanwhile, the US Dollar remains firm after last week’s report showed core inflation still running at 3.8% in January. As a result, markets now think the Federal Reserve may wait until at least June before making its first rate cut. This gap between central bank paths is helping keep GBP/USD trapped in a tight range.
This sideways phase, similar to what we saw in 2025, has pushed down short-term implied volatility in the options market. That makes trades that benefit from a large move—such as buying a straddle—cheaper than usual. A straddle can profit if tomorrow’s data triggers a sharp breakout in either direction.
For traders with a clearer view, wage growth above 6% could support buying call options in search of a move above 1.2750. On the other hand, wage growth below 5.5% could support buying put options. That would reflect expectations for a more dovish BoE and could open the door to a test of support near 1.2500.
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