Pound-to-Dollar Forecast: GBP/USD Risks Sustained Decline Below 1.34

Modified: Sunday, 11 January 2026 20:31 BST - Written by David Woodsmith

STORY LINK Pound-to-Dollar Forecast: GBP/USD Risks Sustained Decline Below 1.34

The Pound to US Dollar exchange rate (GBP/USD) briefly tested the 1.34 level after US jobs data showed slowing payroll growth but a firmer unemployment picture.

The mixed outcome left the dollar supported and reinforced caution around further near-term Fed easing.

GBP/USD Forecasts: Tests 1.34 Support

The Pound to Dollar rate touched the 1.3400 level in immediate reaction to the US jobs data before a recovery to 1.3435 as the dollar failed to hold gains.

The 1.3400 level remains a significant support area for the pair.

UoB commented; “Our view remains unchanged. Looking ahead, if GBP breaks below 1.3400, it could trigger a more sustained decline.”

According to Scotiabank, there has been some evidence of a shift in Pound dynamics; “we see some added near-term risk from the turn in sentiment as we note the signs of exhaustion in risk reversals stalling out after fading a considerable portion of the premium for protection against GBP weakness over the past month or so.”

It added; “We remain neutral absent a clear break below the 200 day MA (1.3393), after which we see risk of an extension to the 50 day MA at 1.3304.”

The latest US jobs report recorded an increase in non-farm payrolls of 50,000 for December compared with consensus forecasts of around 65,000 while the November increase was revised down slightly to 56,000 from the 64,000 reported previously.

The October figure was revised to show a 173,000 decline, primarily due to the slump in government jobs.

The household survey recorded a decline in unemployment to 4.4% from 4.6% and compared with expectations of a slight decline to 4.5%.

Overall, the data was not considered weak enough to justify a further near-term cut in interest rates.

In response, markets priced out the potential for a rate cut at the late-January meeting with the chances of a March move lowered to around 30%.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities commented; “It should mean that the Fed will continue to eye the labor market before cutting rates in the first quarter."

Markets remain on alert for any nomination over the next Fed Chair.

Scotiabank commented; “President Trump said yesterday that he had made up his mind on his Fed chair pick. There was no additional information from the president—other than he had not divulged his choice to anyone— but the comment will likely bolster speculation that an announcement could come shortly.”

There is also the potential for the Supreme Court to make an announcement on the reciprocal tariffs announced in April.

Either of these factors could have a significant impact on the dollar, wider currency markets and risk appetite.

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TAGS: Pound Dollar Forecasts