On Monday, GBP/USD edged lower after a moderate rise the previous day and is currently trading near the round level of 1.3200. The currency pair is under pressure from a stronger US dollar ahead of the release of the ISM Services PMI, the results of which will be known during the North American session. However, investors have revised their expectations for Federal Reserve rate hikes due to recent weak US employment data. At present, financial markets price in a roughly 77.9% probability that the Fed will leave its benchmark interest rate unchanged at its October meeting, compared with 74% before the labor-market report was released.

The shift in market sentiment is linked to unexpectedly weak employment figures: US nonfarm payrolls (NFP) increased by just 29,000 jobs in September, well below the consensus forecast of 90,000. This also represented a sharp slowdown from the revised August figure of 133,000. In addition, the US unemployment rate rose to 4.2%, despite a slight increase in the labor-force participation rate to 61.8%.

Fed official Logan's speech received a high score of 9.2 out of 10 on the FXS Speechtracker scale, representing a "hawkish" surprise compared with the historical average of 8.1 out of 10. She repeatedly emphasized that current monetary policy has not yet reached a restrictive stance and should remain "moderately tight." The view that rising yields may reflect an increase in the term premium, thereby reducing the need for further monetary tightening, has been overshadowed by calls for at least another 50 basis points of rate hikes and a reversal of previously implemented rate cuts. This strengthens expectations that interest rates will remain high for an extended period. Overall, the combination of solid economic growth, a balanced labor market, and a firm commitment to maintaining price stability points to a stronger US dollar, as markets price in a scenario involving more aggressive action by the Fed.

As for the United Kingdom, market participants currently price in expectations for approximately 30 basis points of Bank of England rate hikes by the end of the year, as well as around 90 basis points of overall monetary tightening by 2027. Bank of England officials, including Governor Andrew Bailey, have stated that they are prepared to raise interest rates to combat inflation risks caused by high energy prices.

The pound's outlook appears more positive following MUFG's upward revision to its forecast for UK economic growth.

MUFG analysts note an improvement in the UK's economic conditions and point to increased growth expectations for the current quarter. As a result, MUFG/BTMU reported an "upgrade of its third-quarter growth forecast to 0.4% (from 0.1% in July)." This strengthens the view that stable domestic economic activity may support the pound, even though it is trading close to its yearly lows against the US dollar.

From a technical perspective, the GBP/USD pair is approaching the round level of 1.3200 on the daily chart, maintaining a bearish short-term bias as the spot price remains below the 9-period exponential moving average (EMA). The oscillators are negative, confirming the bears' advantage. The nearest resistance is located at the 9-period EMA (around 1.3259), while a more significant level is at the 50-period EMA (around 1.3399), confirming the overall bearish bias. The round level of 1.3200 provides support. Below it lies the yearly low of 1.3136.