GBP/USD slides 0.6% below 1.35 after UK jobs miss and new chancellor

GBP/USD fell 0.6% to 1.3472 after UK jobs data missed expectations and the appointment of a new chancellor raised questions about fiscal policy direction, extending the pound's worst week in two months.

"The combination of softer labor market data and political uncertainty at the Treasury is a double hit for sterling," said Jane Foley, senior FX strategist at Rabobank. "The market is pricing in a higher risk premium on UK assets until the new chancellor's policy stance becomes clearer."

The pair retreated from last week's highs around 1.3559, with buyers defending the uptrend line above the 50-day exponential moving average at 1.3449 and the 100-day EMA at 1.3415. The relative strength index cooled to about 51, suggesting the pullback represents a short-term correction rather than a trend reversal. Resistance sits at 1.3507, followed by 1.3560, while a break below 1.3449 could open the path toward 1.3340.

The pound's weakness comes as the Bank of England is expected to hold its Bank Rate at 3.75% at the next meeting, with persistent price pressures limiting the scope for easing. A sustained break below 1.3449 would mark a deeper correction, potentially targeting the 1.3340 support level in the weeks ahead.

The broader dollar backdrop added to sterling's headwinds. The US Dollar Index held at 100.69 after another rejection at the descending trendline resistance of 100.77, with the 50-day EMA at 100.79 and the 100-day EMA at 100.87 capping upside. US economic data reinforced the Federal Reserve's cautious stance — June retail sales rose 0.2% month over month, while the control group gained 0.4%, and initial jobless claims came in at 221,000, showing labor market resilience.

Across the Atlantic, the eurozone's outlook remains subdued, with the European Central Bank holding its deposit rate at 2.25%. The euro's weakness against the dollar has done little to offset the pound's broader decline, leaving GBP/USD exposed to further downside if UK data continues to soften.

Traders are now watching the 1.3449 level closely. A daily close below that threshold would mark the first break of the 50-day EMA since April and could accelerate selling toward the 1.3340 support zone, a level not tested since early June. On the upside, a recovery above 1.3507 would be needed to suggest the selling pressure is easing, with a move toward 1.3560 opening the door for a retest of recent highs.

This article is for informational purposes only and does not constitute investment advice.