GBP/USD Bearish sentiment before the big rally 1.26-1.30!

Analyzing GBP/USD, I note that the pair is experiencing some bearish pressure in the European session, trading slightly below 1.2700. The prevailing negative market mood is bolstering demand for the US Dollar, making it challenging for GBP/USD to maintain its position. Despite closing the previous week nearly unchanged, due to a late recovery on Friday, the pair's stability around 1.2700 is threatened by the shift in risk sentiment, which could hinder demand for the Pound Sterling. From a US perspective, the Dollar initially strengthened following the December jobs report, which exceeded expectations with a 216,000 increase in Nonfarm Payrolls. However, this momentum wasn't sustained due to the disappointing ISM Services PMI and the mixed details on the labor market, which kept market speculation alive regarding a potential Federal Reserve policy shift in March. The downward revisions in the November and October job figures, along with a slight decrease in the Labor Force Participation Rate, add complexity to the economic outlook. For GBP/USD, the risk sentiment, especially ahead of the release of the US Consumer Price Index data on Thursday, is crucial. Any negative shifts in Wall Street's performance could further strengthen the USD and put pressure on GBP/USD. Technically, the pair is at a critical juncture. Operationally, I expect the dollar's strength to drive the price below 1.2610 to create a false break with liquidity capture, then start a rally towards 1.30. Best regards and have a good trading day from Nicola.