GBP/USD stayed above 1.2400, trading at around 1.2430 as market sentiment improved in the wake of US President Donald Trump’s decision to hold back tariffs on Mexico and Canada. However, uncertainty remains since China will have to endure a 10% all-around tariff with definitive trade talks set for within the next 24 hours. The US Dollar Index (DXY) has stabilized at 108.70, buoyed by the release of positive ISM Manufacturing PMI data. The Pound was under pressure due to expectations of a 25 basis point reduction in interest rates by the BoE to 4.5% on Thursday as inflation indicators slow down. Market volatility still keeps traders wary.
KEY LOOKOUTS
• GBP/USD traders look for the 10% tariff on China, with the potential for volatility depending on the outcome of US-China trade negotiations.
• The Bank of England is likely to cut the rates by 25 bps to 4.5%, which will weigh on the Pound’s strength.
• The US Dollar Index stabilizes around 108.70, supported by stronger-than-expected ISM Manufacturing PMI data, which influences the movement of GBP/USD.
• Investor sentiment remains fragile as traders monitor geopolitical developments, including Trump’s tariff policies and global risk-on sentiment shifts affecting currency markets.
GBP/USD remains steady above 1.2400 as traders closely monitor key developments, including the impact of US tariffs on China and upcoming trade negotiations. The Pound is under pressure as the market expects the Bank of England to cut interest rates by 25 basis points to 4.5% on Thursday, which will be dovish in nature as inflation slows down. The US Dollar Index stabilizes around 108.70, supported by stronger-than-expected ISM Manufacturing PMI data. Market volatility persists as investors assess geopolitical risks, particularly Trump’s shifting tariff policies and global risk sentiment, which could influence the currency pair’s movement in the coming sessions.
GBP/USD stays above 1.2400 as traders monitor US-China tariff developments and the Bank of England’s expected rate cut. The US Dollar stabilizes around 108.70, supported by strong economic data, while market volatility remains high amid shifting global risk sentiment.
•The pair trades at 1.2430 while supported by improvement in risk sentiments and tariff negotiation.
• The 10 percent tariff on China comes into place, and crucial trade talks will be seen over the next 24 hours
• The Pound is likely to be weighed as the Bank of England is poised to cut 25 basis points interest rate at 4.5 percent by Thursday
• The US dollar index is now trading around 108.70, supported by stronger-than-expected ISM Manufacturing PMI data.
• Trump delayed tariffs for a minimum of 30 days due to border security commitments from both countries.
• Uncertainty over trade policies, economic data, and political events keeps investors nervous.
• Rising wage growth in the UK might become another factor by moving forward future BoE policy decisions as inflation is slowing.
GBP/USD hovers at 1.2430 just above 1.2400, though traders continue to be vigilant about the fast-moving global trade changes and shifts in monetary policies in the world. The market is cautious as the US-China tariff tension is still a concern, although the 10% across-the-board tariff would be implemented, and trade talk between the two nations may play a role in currency movement. Meanwhile, interest rate cuts from the Bank of England are seen to be trimmed by 25 basis points on Thursday to 4.5%, which reflects a dovish tone due to slowing inflation. This may pull down the Pound.
GBP/USD Daily Chart
TradingView Prepared by ELLYANA
US Dollar Index stabilizes at around 108.70 with ISM Manufacturing PMI higher than anticipated, coming at 50.9 for January, while attention to Trump postponing tariffs against Mexico and Canada for 30 days also lowered the immediate impact of trade war. These happenings do not make market sentiment stabilize; geopolitical risks, economic data, and central bank policies keep on bringing in a fluctuation in the value of GBP/USD over the coming sessions.
TECHNICAL ANALYSIS
GBP/USD is still above 1.2400 and has shown strength against global uncertainty, with mixed signals from technical indicators. The pair is currently trading near 1.2430, where it is testing the 50-day moving average as a major support level. A sustained move above 1.2450 could push the pair towards the psychological resistance of 1.2500, while a break below 1.2400 may expose the support at 1.2350. The Relative Strength Index is seen hovering near the neutral 50 level, thus showing a lack of strong momentum in either direction. The Moving Average Convergence Divergence remains flat and reflects indecision in market sentiment. Price action around these levels will be carefully watched, as further volatility can be expected before the BoE rate decision and US-China trade developments.
FORECAST
If GBP/USD can overcome the 1.2450 resistance level, which is backed by positive risk appetite and a soft US Dollar, its rallies are likely to continue. In case of the pair’s successful clearance of this point, the next one to be watched at the level of 1.2500 will be a psychological one that will attract higher buying. A bullish breakout above this point may send the currency higher through 1.2550 and 1.2600 within the short term. Positive news from the US-China trade talks or more hawkish-than-expected rate decision by the Bank of England can be helpful for the Pound to go upward. Also, if US data is disappointing and the Federal Reserve hints at its dovish sentiment, then further weakness in US Dollar will aid GBP/USD.
Downward, the former remains susceptible at the support region of 1.2400, which now becomes the very next important zone of support lies at 1.2350. A break below this level can push the prices further down, toward 1.2300 and 1.2250, as pressure mounts in the market due to concerns over the UK economy, and the Bank of England considering a rate cut. If it becomes more dovish or talks about more rate cuts in future, the pound may face some more selling pressures. Escalating US-China trade tensions or continued strong US economic data may also see USD regain some strength as this could further weigh on GBP/USD. Watch for geopolitical risks and shifts in market sentiment driving volatility to the downside in the pair.
