• GBP/USD held firm on Monday as dollar weakened following surprisingly weak U.S. employment data that has cemented expectations for a U.S. rate cut this month.
• U.S. job growth weakened sharply in August, with the unemployment rate rising to 4.3%, its highest in nearly four years, confirming softer labor market conditions and cementing expectations of a Fed rate cut next week.
• Focus now shifts to the U.S. inflation report on Thursday that could offer more clarity on the size of the Fed's expected rate cut.
• The Bank of England is unlikely to cut rates this year, as inflation stays well above target and the economy slows without clear signs of deeper weakness.
• This divergence gives sterling and UK assets an edge, as investors benefit from relatively higher British interest rates.
• Immediate resistance is located at 1.3578 (38.2%fib), any close above will push the pair towards 1.3616(Higher BB)
• Strong support is seen at 1.3493(SMA 20) and break below could take the pair towards 1.3415(50%fib).
Recommendation: Good to buy around 1.3500 with stop loss of 1.3450 and target price of 1.3600
