GBP/USD rose 0.25% to near 1.3590 in European trading on Friday, with the Pound stronger against most major peers. S&P 500 futures were up 0.3% to near 7,360, while the US Dollar Index was down 0.16% to about 98.10 after a Thursday rebound.
Risk appetite improved after US President Donald Trump said the ceasefire with Iran remains intact, despite attacks near the Strait of Hormuz. Markets are also focused on the US Nonfarm Payrolls release for April at 12:30 GMT, which may affect the Federal Reserve policy outlook.
Technical Levels And Near Term Outlook
The jobs report is forecast to show 62K new roles, down from 178K in March. GBP/USD is trading above the 20-day EMA at 1.3519 and the 50.0% Fibonacci level at 1.3512.
The 61.8% Fibonacci level at 1.3595 is near-term resistance, and the RSI is around 58. A move above 1.3595 could target 1.3713 and then 1.3864, while support sits at 1.3519 and 1.3512, then 1.3428, 1.3325, and 1.3159.
We recall looking at the 1.3600 level for GBP/USD back in 2025, when a risk-on mood driven by geopolitical calm was the main driver. Today, on May 8, 2026, the situation has shifted as the pair trades near 1.3150. The previous bullish technical structure has been replaced by a more complex and data-dependent environment.
The focus then was on a weak US Nonfarm Payrolls report, but now we see a more pronounced slowdown in the American economy. The latest NFP data for April 2026 came in below expectations at 155,000, and Q1 GDP was revised down to a sluggish 0.9%. This economic cooling has the market pricing in Federal Reserve rate cuts by the end of the year, weakening the dollar’s appeal.
In contrast, the UK is dealing with stubborn inflation, which recent data shows is holding at 2.8%, still significantly above the Bank of England’s target. This monetary policy divergence, with the BoE potentially hiking again while the Fed prepares to cut, is now the primary driver for Sterling. Historically, such policy differences have often led to sustained trends in currency pairs.
Derivatives Positioning For Sterling
For derivative traders, this suggests positioning for potential GBP/USD strength in the coming weeks. Buying call options with strike prices near 1.3250 and expirations in late June could be an effective way to play a rally toward the year’s highs. This strategy provides exposure to the upside while clearly defining the maximum potential loss.
An alternative approach involves selling out-of-the-money put options with strikes below the 1.3000 psychological support level. This strategy collects premium and profits if the pair trades sideways or moves higher, reflecting a view that downside is limited. Traders should, however, remain mindful of implied volatility, which could rise ahead of the next central bank meetings.
