GBP/USD loses ground after good US labor market data

• GBP/USD is currently trading at 1.2615, posting modest losses.
• Broad-spectrum technical indicators reveal bullish movements for longer terms, but the short-term outlook is negative.
• The dollar is gaining traction thanks to positive labor market numbers as markets bring forward the Fed's easing cycle to May.

On Thursday, the pair GBP/USD fell back towards the 1.2615 level, showing slight losses, as encouraging US labor market numbers benefited the Dollar, with jobless claims for the week ending February 3 lower than expected. However, the Bank of England (BoE) maintains a somewhat similar stance to that of the Federal Reserve (Fed) in delaying rate cuts, so losses could be limited.

Elsewhere, markets are forecasting rate cuts of 100 basis points over the next 12 months, starting in June, while investors see further easing of 125 basis points in 2024 by the Fed, indicating that the Pound losses may be limited. However, everything will depend on the data that becomes known, since it will set the expectations for the next decisions. Next Tuesday, January inflation figures will be published in the United States, while key labor market figures will be released in the United Kingdom that will likely set the pace for the pair for the coming sessions.

GBP/USD daily chart

The indicators on the daily chart reflect a bearish bias for the short term. The Relative Strength Index (RSI) is down and in negative territory. This clearly shows that market sentiment favors sellers. At the same time, the Moving Average Convergence Divergence (MACD) returns red bars, indicating that the selling pressure is not decreasing. That said, in the overall picture of the markets, the pair is below the 20-day SMA, but above the 200-day and 100-day SMA. This suggests that the overall bullish trend prevails, despite recent moves lower, but as long as buyers fail to recapture the 20-day moving average, further declines may be on the horizon.

GBP/USD daily chart