GBP/USD Price Forecast: Needs to Stabilize Above 1.3600 to Trigger Fresh Rally
Date: May 8, 2026
Author: Sagar Dua, FXStreet
The GBP/USD currency pair has shown signs of strength during the European trading session on Friday, trading approximately 0.25% higher to near 1.3590. This upward momentum comes amid a renewed risk-on market sentiment, where investors’ appetite for higher-yielding and risk-sensitive assets is resurging.
Market Context and Current Dynamics
The British Pound is outperforming major currencies, except some Antipodean counterparts, reflecting investor confidence linked to broader market trends. Meanwhile, S&P 500 futures are currently trading up by 0.3% near 7,360, indicating a robust demand for equities and riskier assets overall.
Conversely, the US Dollar Index (DXY), measuring the Greenback’s value against six key currencies, has slipped about 0.16% back to roughly 98.10 after a minor recovery on Thursday. This retreat is supporting the GBP/USD’s upward trajectory.
Significant geopolitical developments have contributed to this upbeat tone. US President Donald Trump confirmed that the ceasefire with Iran remains intact, easing tensions despite recent hostilities near the strategic Strait of Hormuz. The confirmation has relieved some risk aversion in markets, spurring a rally in risk-sensitive currencies including the Pound.
Upcoming Economic Data: US Nonfarm Payrolls
Market participants are keenly awaiting the release of the US Nonfarm Payrolls (NFP) data, scheduled for publication at 12:30 GMT on Friday. The employment report for April is forecasted to show gains of 62,000 new jobs, a sharp decline from the previous 178,000 additions recorded in March.
This labor market data is crucial as it could provide fresh insights into the Federal Reserve’s monetary policy stance going forward. Traders anticipate that a softer employment figure might imply a more dovish Fed approach, potentially weakening the US Dollar further and supporting GBP/USD gains.
Technical Analysis: Key Levels to Watch
Currently, GBP/USD trades just below a critical resistance zone, holding around 1.3590. The pair maintains a bullish bias, resting above its 20-day exponential moving average (EMA) at 1.3519 and the 50% Fibonacci retracement level at 1.3512. The immediate resistance lies at the 61.8% Fibonacci retracement near 1.3595. A decisive break above this barrier would likely pave the way for the pair to test the 78.6% Fibonacci level at 1.3713, and potentially the recent cycle peak at 1.3864. On the downside, initial support is anchored at the 20-day EMA and the 50% retracement zone. Should the pair fail to sustain above these levels, further pullbacks could target the 38.2% retracement at 1.3428 and the 23.6% level at 1.3325. A drop below 1.3159 would signal a broader bearish shift, undermining the current bullish momentum.
The Relative Strength Index (RSI) stands near 58, indicating steady, yet not overextended, buying pressure.
Why Nonfarm Payrolls Matter
The Nonfarm Payrolls report is one of the most significant economic indicators affecting forex markets, especially the USD. It reflects job creation in the US excluding agricultural employment and provides a timely proxy for economic health.
A stronger-than-expected NFP reading generally supports a robust dollar, hinting at economic strength and potential Federal Reserve rate hikes. Conversely, a weaker report can signal economic slowing, potentially causing the USD to soften – a factor that would likely benefit GBP/USD.
Summary
The GBP/USD pair is poised for a potential upside continuation provided it can stabilize and hold above the crucial 1.3600 level. Market optimism fueled by eased geopolitical tensions and a softer US dollar backdrop contribute to this outlook. However, traders will closely watch today’s US Nonfarm Payroll data for confirmation on the path of the Federal Reserve’s monetary policy and the next directional cue for the pair.
Disclaimer: This analysis is intended for informational purposes and does not constitute financial advice. Traders should perform their own due diligence before making investment decisions.
About the Author:
Sagar Dua has been actively engaged with financial markets since his student days and specializes in forex and technical analysis. He contributes comprehensive market forecasts and analysis to FXStreet.
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