Sterling Treads Water as Dollar Firms: A Technical Stalemate Post-NFP

The British pound concluded the week in muted fashion, weighed down by resurgent dollar strength and indecision across broader risk markets. The early release of the U.S. Non-Farm Payrolls report on Wednesday, 3 July — brought forward ahead of the Independence Day holiday — offered little reprieve to sterling bulls. While the figures came broadly in line with expectations, the tone of the data was sufficiently robust to reinforce the Federal Reserve’s cautious stance on rate cuts, lending the dollar a defensive tailwind.

From a technical standpoint, GBP/USD remains rangebound but fragile. After breaching the 1.3690 level earlier in the week, price action has struggled to reclaim it with any conviction. Multiple attempts to trade back above were thwarted by layered resistance around the 50- and 100-period moving averages on the H1 and H4 timeframes, clustered tightly between 1.3655 and 1.3680. The rejection at these levels signals market hesitation and reflects a broader lack of conviction heading into the second half of the year.

The sell-off on Tuesday was sharp but orderly — characterised by thin liquidity and low headline catalysts — suggesting positioning rather than panic. Price found interim support at 1.3615, but rallies have lacked follow-through, with the pair now oscillating in a compressed range, trapped between waning bullish momentum and reluctant sellers.

Fundamentally, sterling remains tethered to macro crosscurrents: a Bank of England that is dovish in rhetoric yet cautious in action, and a dollar buoyed by persistent economic outperformance. Markets are still grappling with the implications of a U.S. economy that refuses to roll over. Job growth remains steady, inflation expectations are anchored, and consumer data has, thus far, defied the tightening cycle.

Heading into the next week, attention will shift to U.K. GDP revisions, services PMI prints, and further U.S. labour market data. Yet in the absence of a clear catalyst, the prevailing tone is one of sideways drift. Unless price can decisively break above 1.3690 and hold, the risk tilts toward further downside — with 1.3540 and 1.3480 acting as the next key technical levels of interest.

For now, GBP/USD finds itself suspended in technical limbo, caught between economic narratives that are neither dovish enough to inspire a breakout, nor hawkish enough to catalyse a breakdown. It is, in every sense, a market waiting for a reason to move.