GBP/USD leans positive as markets head towards mid-week NFP report.

GBP/USD Analysis

GBP/USD continues to show a generally bullish trend on the daily chart. The price is notably higher than the 50 Exponential Moving Average (EMA) at 1.3507 and the 200 EMA at 1.3310, reinforcing the ongoing uptrend that began after the November 2025 low around 1.2300. But, there was a significant drop from the January high of 1.3869, especially after the Bank of England (BoE) decided to keep its policy rate steady at 3.75%. This decision came from a dovish split vote of 5-4, where four Monetary Policy Committee members pushed for a 25 basis point cut. On Monday, there was a slight recovery, with prices bouncing back from a Friday close near 1.3600 to about 1.3695, forming a bullish daily candlestick above the 1.3690 mark. This level aligns with the late January consolidation area between 1.3690 and 1.3770, which had served as support prior to last week’s market movement. The overall trend still suggests higher daily highs and higher lows, although uncertainty around Prime Minister Starmer’s leadership in the UK poses challenges.

Looking ahead to Tuesday, important data releases include US Retail Sales for December and the Employment Cost Index for Q4, both set to come out at 5:30pm GMT. Additionally, Federal Reserve officials Mr. Hammack and Mr. Logan will be making speeches. The stochastic oscillator on the daily chart, following a slight retreat from overbought territory, indicates there could still be potential for upward movement if the momentum builds. If GBP/USD consistently pushes above the 1.3700 mark on Tuesday, it could aim for the previously broken support now acting as resistance around 1.3770, with further increases possibly aiming for the January high at 1.3870. On the flip side, if US data disappoints, it might provide initial support for GBP, but any surprising performance in retail sales or hawkish comments from the Fed could lead to a revisit of last week’s lows at 1.3590. The 50 EMA around 1.3507 could offer solid support. The upcoming 1.3690-1.3700 range will be crucial; how prices behave here before the US data release will likely influence trends for the week.