UK labor report gives pound a reality check: What's next for GBP

[Redator]

Published overnight, the latest UK labor market data has raised several red flags for the economy, signaling a possible shift in the broader macro outlook.

Persistent inflation pressures constrain the Bank of England’s rate-cut path, leaving the BoE with the second-highest policy rate among OECD economies, just behind the Federal Reserve at 4%.

(FYI Fed Chair Powell will be speaking here for those interested)

Bank of England rate odds – October 14, 2025 – Source: LSEG

If everything stays as it is, it would support the GBP (and has done so for the first half of 2025), but some challenges are appearing ahead.

Earlier in the year, the pound’s strength was supported by solid employment and wage growth.

However, the long-term effects of Brexit—notably on food inflation—are weighing on household spending, with a UK resilience now looking increasingly fragile.

The latest jobs report showed slower pay growth and a weaker jobs market, reigniting stagflation concerns.

The BoE now faces a dilemma: cutting rates risks fueling inflation, while holding steady could deepen the slowdown in employment and growth.

This uncertainty is pressuring the pound.

Let’s take a closer look at the technical levels and technical setups for GBP/USD and GBP/JPY to see how that translates to the charts

Read More:

• WTI Oil tumbles as US-China trade tensions flare up again
• US-China trade war scare: What happened Friday and where things stand now

GBP/USD 8H Chart and levels

GBP/USD 8H Chart – October 14, 2025 – Source: TradingView

The Pound had fallen to new bi-monthly lows after the labor report but some contradicting price action is appearing ahead.

A double bottom has show its face with some small bullish divergence.

In the context of the ongoing broad US dollar selloff that started this morning, it will be interesting to see who wins the tug-of-weakness between the two.

Now just crossing back above the 1.33 psychological level, back 600 pips from the overnight lows, there are two levels to keep you eyes on:

To the upside, the 1.3350 to 1.3360 pre-data zone that comes at a confluence with the channel's upper bound. A break above could relaunch a more bullish GBP demand.

A retest of the 1.3248 to 1.3260 daily lows would mark another sign of weakness for the pound: Watch for a break if traders bring GBP/USD back there again.

In the current contradicting context, some rangebound conditions appear overall.

Levels of interest for GBP/USD trading:

Resistance Levels

• 1.34 Support Zone now key pivot
• 1.3350 to 1.3360 daily highs and channel upper bound
• Pivot now resistance 1.3450 to 1.34650
• Main Resistance zone around 1.35

Support Levels

• Pivotal Support 1.3260-1.33
• 1.32486 overnight lows
• S2 1.3170 - 1.31850
• 1.3140 August 1 lows

GBP/JPY 8H Chart and levels

GBP/JPY 8H Chart – October 14, 2025 – Source: TradingView

In our most recent (now a bit out-dated) GBP/JPY analysis, we explored how the 200.00 level was defended by sellers which they had used as resistance to sell the pair.

However, fundamentals changed quite largely for the yen throughout the beginning of August, particularly as it comes to Japanese politics: The newly elected LDP leader (governing party in Japan) has scared markets on a bad fiscal outlook which quickly undone any yen strength.

This was a goldmine for GBP/JPY bulls. However, with the current state of markets, the balance seems to be tilting yet again.

Growth sentiment is getting highly affected by the US-China trade tensions and this helps the safe-haven yen.

As expected for the most volatile FX pair, there has been some intense swings in that period – Looking at the current course of action, the 8H momentum is hanging around neutral.

Traders may look at the downward trendline to spot where flows can head next, with the 201.27 level acting as a key level to observe for upcoming action.

Levels of interest for GBP/JPY trading:

Support Levels:

• 201.27 pre-Bank of Japan highs and overnight lows
• 200.00 psychological level
• Main Pivot (previously resistance) 199.00 to 200.00
• Intermediate Support 195.00 to 196.85

Resistance Levels:

• July 2024 downward pivot 203.00
• Downward trendline at 202.95
• Post-Election highs 205.33
• 208.120 July 2024 highs

Safe Trades!

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