This year has already seen volatile action in currency markets, and traders are switching from a US dollar trend to its reversal. On the other side of the Atlantic, the United Kingdom is facing its own economic challenges, which have contributed to high volatility in GBP/USD.
The United Kingdom recently released a string of weaker data, which not only contributed to a reinstatement of Bank of England pricing for cuts in 2026 but also brought GBP/USD to retest lower levels.1
The UK Office for National Statistics published a report indicating that the unemployment rate rose to a 5-year high, with wage growth slowing, a decent combo to justify rate cuts. 2 The only issue the central bank faces on that front is UK inflation, currently at 3%, while the BoE target is around 2%.
Looking at US data, the labor market points to another wave of strengthening, and inflation remains elevated, as last Friday’s Core PCE report (3% vs 2.8% expectations) provides even less reason for the Federal Reserve to cut rates.3
A recent wave of US dollar strength has pushed the major currency pair back towards the 1.35 level, a key momentum pivot. A daily double-top has formed, but double-tops don’t always signal downside; hence, traders will want to look for further confirmation.
Held between its 50 and 200-day moving averages, this week will prove a heavy test for upcoming action in the pair.
GBP/USD daily chart, February 23, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- June 2022 extremes 0.72 to 0.7230
- 0.71470 past week highs
- 2023 highs from 0.71 to 0.7150 resistance (testing)
Support levels
- December 2021 lows 0.70 to 0.7050 major pivot
- 0.69 to 0.6945 early February support
- Micro-support 0.6850 (+/- 30 pips)
- September FOMC highs support 0.6680 to 0.6710
This article and its contents are intended for educational purposes only and should not be considered trading advice. Forex trading is high-risk. Losses may exceed deposits.
