British Pound slides as US yields spike, UK jobs market cracks

• US 10-year yield hits 16-month peak on inflation fears.
• UK payrolls drop 100K as unemployment rises to 5%.
• Starmer leadership pressure deepens as Burnham eyes challenge.

The British Pound retreats by 0.31% during the North American session as the Greenback rises, underpinned by soaring US Treasury yields as investors price in a spike in inflation from the energy shock. The GBP/USD trades at 1.3392 after reaching a daily high of 1.3437.

GBP/USD slips as inflation fears lift Dollar and yields

Geopolitical matters and their impact are driving the financial markets. High energy prices due to Iran’s war prompted investors to increase risk premiums in the bond market, with the US 10-year Treasury note reaching a 16-month peak of 4.687% as traders priced in a Federal Reserve rate hike towards the end of the year.

The US crude Oil benchmark, WTI, is up 0.79% at $103.29 a barrel, even though US President Donald Trump is optimistic about reaching a deal with Tehran. On Monday, he posted that he would not proceed with an attack against Iran on Tuesday, due to its allies pushing to strike a deal.

Nevertheless, Iran’s proposal has not changed from its previous offer, in which it delayed discussions on uranium enrichment.

The US economic docket was absent, with traders eyeing the release of the minutes of the Fed’s last monetary policy meeting, led by the outgoing Chair Jerome Powell. Later, on Friday, Kevin Warsh will be sworn in as the new Chief of the US central bank.

In the UK, payroll data showed employment dropped by 100K from March to April, while previous months were revised lower. The Unemployment Rate rose from 4.9% to 5%.

Political turmoil in Great Britain is pressuring Sterling as Prime Minister Keir Starmer fights to retain the Labour Party leadership. The Greater Manchester Mayor, Andy Burnham, is seeking a seat in parliament to challenge Starmer.

Ahead this week, the UK economic docket will feature April inflation data, expected to dip from 3.1% to 2.6% YoY.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3394, holding just under a cluster of simple moving averages (SMAs) near 1.3429 that now cap the upside and keep the near-term bias tilted bearish. Price is also testing a descending resistance trend line, suggesting rallies remain fragile, while the Relative Strength Index (RSI) at 43.6 leans toward weak momentum rather than oversold conditions, hinting that sellers still retain the upper hand unless the pair can reclaim the overhead averages.

On the topside, immediate resistance is located at the confluent 50-day, 100-day and 200-day SMAs clustered around 1.3429, where any daily close above would ease the current downside pressure and open the door to a broader recovery attempt. On the downside, the absence of clearly defined nearby support levels from the provided indicators implies that a failure to hold the 1.3390 area could see GBP/USD extending its slide toward prior swing lows on the chart, leaving short-term risks skewed to further weakness while it remains capped beneath the moving average cluster.

(The technical analysis of this story was written with the help of an AI tool.)