GBP/USD fell for a second day, down 0.12%, and traded at 1.3205. The move followed US Nonfarm Payrolls data and inflation that has stayed above target for five years.
The US created over 178K jobs in March versus forecasts of 60K. February was revised down to -133K, while the unemployment rate fell to 4.3% from 4.4%.
Dollar Support From Jobs And Rates
The US Dollar Index was up 0.12% and moved back above 100.00. Market pricing pointed to steady US interest rates, with the Middle East conflict cited as a factor.
The S&P Global Services PMI fell to 49.8 in March from 51.7 in February, its first contraction since January 23. The survey also pointed to slower employment growth and rising price pressures.
US Treasury yields, including the 2-year, edged higher after the jobs report. CBOT data showed reduced expectations for US rate cuts, with markets leaning towards no change this year.
On the chart, price stayed below clustered SMAs near 1.3550 and below resistance that began at 1.3869. Support levels were set at 1.3200, then 1.3100 and 1.3035, while resistance sat at 1.3300, 1.3400 and 1.3500.
Trade Setup And Risk Framing
The strong US jobs report, showing 178K new positions against a 60K forecast, reinforces the case for a stronger dollar and a hawkish Federal Reserve. While the contracting Services PMI introduces stagflation fears, the immediate market reaction focuses on the Fed’s need to combat inflation. This puts clear downward pressure on pairs like GBP/USD, currently trading at 1.3205.
This view is strengthened by the latest US CPI data from March 2026, which showed inflation remaining sticky at 3.8%, well above the Fed’s target. Across the Atlantic, the UK’s most recent retail sales figures for February 2026 revealed a 0.5% contraction, giving us little reason to expect offsetting strength from the pound. This fundamental divergence between the two economies supports a weaker GBP/USD exchange rate.
Given this backdrop, we should consider buying put options on GBP/USD with strike prices below the 1.3200 handle, targeting a move toward the 1.3100 or even 1.3035 support zones. The pair’s repeated failure to overcome resistance near 1.3550 confirms this bearish outlook. Selling call options with strikes near 1.3400 is another strategy to consider for capitalizing on the expected range-bound to lower price action.
This environment is starting to feel like the market uncertainty we saw in mid-2025, where conflicting data forced policymakers to prioritize inflation over growth. We saw then that central banks who blinked on inflation were punished in the currency markets. The Fed is unlikely to make that mistake, suggesting continued dollar strength is the path of least resistance.
The Cboe’s British Pound Volatility Index has already risen to 9.5, reflecting growing market anticipation of larger price swings. This elevated volatility makes purchasing options with defined risk, like puts, more attractive than taking on unlimited risk with short futures positions. This allows us to position for a drop while protecting against any sudden, sharp reversal.
