Bank of England rate-cut bets are on the rise after the unemployment rate reached its highest level since 2021. The jobless rate reaching nearly COVID-19 shock levels is a big signal for the central bank. At the last meeting, the 5-4 vote already showed that members are almost ready to cut rates. Tomorrow, inflation is expected to retreat to 3% as well. If it comes out at least as expected, one more obstacle will be removed for a rate cut at the March meeting.

GBPUSD is under pressure not only from rate-cut bets but also from political risks. Starmer is under pressure with the lowest approval ratings ahead of the local elections, a weak economy, and policy U-turns. But so far, gilts are focusing on rate-cut bets, and the effect of political risks has stayed limited.

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The failure of 1.36 support is important for the short term. If GBPUSD cannot recapture the key level, the pair could fall to around 1.35, which will trigger a major trend test for the medium term. So far the downward pressure is expected to continue. The biggest help for GBP is coming from Japan so far. The fall in USDJPY is keeping the dollar index low and the GBPUSD retreat mild.