GBP/USD edged up on Friday as the US Dollar softened. Trading was quiet because of the Good Friday holiday, with attention on the US Nonfarm Payrolls report later.
The pair traded near 1.3234, after reaching a four-month low of 1.3159 earlier in the week. The US Dollar Index hovered near 100 after hitting a 10-month high of 100.64 on Tuesday.
Market Backdrop And Risk Drivers
GBP/USD stabilised around 1.3227 after falling on the previous day. Geopolitical tension, including US statements and uncertainty over the Strait of Hormuz, pushed oil prices higher and supported demand for the US dollar.
The pound also faced pressure from the UK’s reliance on energy imports and concerns about public finances. UK government bond yields rose alongside energy prices.
In technical trading, GBP/USD held gains after losing over 0.5% the day before and traded near 1.3230 in Asian hours. The daily chart showed a bearish bias within a descending channel.
The pair stayed below the nine-day and 50-day EMAs, which limited rebounds. It has posted lower highs and lower closes from around 1.35, pointing to further downside pressure.
From 2025 Setup To 2026 Reality
We recall that around this time in 2025, GBP/USD was trading near 1.3230 amid rising geopolitical tensions and concerns over UK public finances. The pair was under significant bearish pressure, with the US Dollar Index pushing towards multi-month highs. The technical setup at that time clearly pointed to a deteriorating trend for the pound.
Today, on April 3, 2026, the situation has evolved, with the pair now trading significantly lower around 1.2250. The bearish sentiment from last year largely materialized, but the key drivers have shifted from broad geopolitical risks to a stark divergence in economic data. The primary focus for traders is now on sticky inflation and the resulting central bank policy paths.
The latest UK inflation data from March 2026 showed a persistent reading of 3.1%, keeping immense pressure on the Bank of England to maintain its restrictive stance even as economic growth slows. In contrast, the US Nonfarm Payrolls report released today revealed a robust gain of 275,000 jobs, reinforcing the Federal Reserve’s case for holding interest rates higher for longer. This fundamental strength continues to favor the US dollar.
Given this backdrop, we see continued downward pressure on GBP/USD, with potential for a test of the 1.2100 level in the coming weeks. Derivative traders should consider buying put options with strike prices around 1.2150 and 1.2050, targeting expiries in late May or June. This strategy provides a defined-risk way to profit from further pound weakness.
For those with a less directional view or looking to generate income, selling out-of-the-money call options could be a viable strategy. A bear call spread, involving selling a call at a 1.2400 strike and buying one at a 1.2500, would capitalize on the expectation that the pair will not rally significantly. This approach profits from both a drop in price and time decay.
