The GBP/USD currency pair rebounded toward 1.34, trading at 1.3361 during the European session, as traders looked past strong US economic data and focused on geopolitical developments and upcoming US jobs reports [1]. The pair edged toward a daily high of 1.3402 amid market relief over a possible de-escalation of the conflict between the US and Iran, but a Reuters report stating 'US sub sinks Iranian warship' triggered a leg-down in GBP/USD [1].
US macroeconomic data released included the ISM Services PMI for February, which rose to 56.1 from 53.8, exceeding estimates for a deceleration to 53.6, indicating business activity is gathering pace [1]. The ADP Employment Change report for February showed private companies hired 63K people, nearly triple January's 22K and above forecasts of 50K [1]. Despite these strong US data points, traders largely ignored them, focusing instead on Friday’s Nonfarm Payrolls report [1].
In the UK, Chancellor of the Exchequer Rachel Reeves stated that the government had the 'right economic plan' and acknowledged inflationary pressures due to the Middle East conflict, emphasizing efforts to secure the economy against shocks and protect families from external turbulence [1]. Money markets reacted to the conflict by trimming the odds for a Bank of England rate cut, with the probability dropping from 74% to 25% as oil prices jumped, according to Prime Market Terminal data [1].
Technically, GBP/USD trades at 1.3380 with a mildly bearish near-term bias, as price slipped below clustered simple moving averages around 1.3535. The recent break under the 1.3498 trend-line resistance-turned-cap underscores sellers’ control, though the longer-term rising support line from 1.3035 tempers the downside outlook into a corrective tone rather than a fully developed downtrend. Initial resistance is at 1.3498, followed by the late-January high near 1.3554. A daily close above this zone would be needed to negate the current bearish bias [1].
CONCLUSION
GBP/USD rebounded but remains under mild bearish pressure, with traders largely ignoring strong US data in favor of geopolitical developments and upcoming US jobs reports. The odds of a Bank of England rate cut have dropped sharply due to rising oil prices and Middle East tensions. Market sentiment is cautious, with technical resistance levels and upcoming US employment data likely to influence near-term direction.