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GBP/USD Stays Strong Above 1.2650 on Soft US Jobless Claims and UK Economic Volatility

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  • February 21, 2025
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GBP/USD stays strong at above 1.2650, hitting a two-month peak of 1.2674 as the US Dollar falters on weak jobless claims figures. US Initial Jobless Claims increased to 219,000, topping forecasts, and mixed messages from Federal Reserve policymakers contributed to uncertainty in the market. Optimism in the wake of possible US-China trade developments supported the pair further. Nevertheless, fears over UK economic prospects remain, with Bank of England Governor Andrew Bailey issuing warnings regarding sluggish growth and a deteriorating labor market. A better-than-expected UK CPI release did little to quash Bailey’s description of the inflation surge as transient, leaving traders wary of impending policy action. KEY LOOKOUTS • The increase in US Initial Jobless Claims to 219,000 led to a weakening US Dollar, supporting GBP/USD but also creating doubts regarding labor market stability. • Bank of England Governor Andrew Bailey issued a warning of slow growth and easing labor market, casting further doubts on the long-term Pound Sterling strength. • Uncertainty regarding inflation and interest rate cuts by Fed officials sends mixed signals to traders, affecting market sentiment and GBPCAD price action. • Relief from potential gains in US-China trade negotiations alleviated market concerns, and it added further to support for GBP/USD in the short run. GBP/USD continues to stay above 1.2650, supported by a softer US Dollar on the back of increasing jobless claims and conflicting signals from the Federal Reserve. The rising US Initial Jobless Claims to 219,000 indicated potential labor market weakness, weighed on the USD and helped the Pound Sterling. In the meantime, Bank of England Governor Andrew Bailey’s caution regarding the slow UK economic growth and weakening labor market kept investors wary of the strength of the GBP. On the other hand, optimism over possible US-China trade negotiations progress gave risk assets some bullish push. But the uncertainty lies in the fact that the Federal Reserve is considering inflation risks and possible rate reductions, making the future direction of GBP/USD reliant on future economic releases and policy actions. GBP/USD continues to stay above 1.2650, helped by a weaker US Dollar on rising jobless claims and conflicting Fed cues. UK economic worries still exist, as BoE Governor Andrew Bailey warned of slow growth. In contrast, hopes regarding US-China trade negotiations provide some bullish push, though market volatility still exists. • The pair continues to remain above 1.2650, hitting a two-month peak of 1.2674 as the US Dollar weakens. • First-Time Jobless Claims rose to 219,000, beating forecasts and hinting at potential weakness in the labor market. • Bank of England Governor Andrew Bailey cautioned of weak UK growth and a declining labor market. • A more-than-forecasted UK CPI report temporarily pushed the Pound higher, but Bailey dismissed its longer-term relevance. • Fed officials are still skeptical of inflation and upcoming rate reductions, leaving traders on their guard. • Encouraging trade negotiation news between the US and China supported market sentiment somewhat. • Future direction of GBP/USD will be based on future economic indicators, central bank actions, and international trade dynamics. GBP/USD continues to be in the spotlight as the global economic landscape influences market mood. Recent economic data indicate the concern over US labor market stability, with an increase in jobless claims pointing towards possible economic difficulties. In the meantime, in the UK, economic growth and inflation remain among the topics of debate, with policymakers weighing external influences, including global trade patterns and monetary policy, that could affect stability over the longer term. Bank of England Governor Andrew Bailey has sounded a note of caution on the UK’s muted growth and changing labor market dynamics, indicating the importance of prudent policy decisions over the next few months. GBP/USD Daily Price Chart TradingView Prepared by ELLYANA Globally, there has been some relief for investors from optimism surrounding US-China trade talks, which has alleviated concerns over higher tariffs and possible supply chain disruption. Also, Federal Reserve officials have given conflicting opinions on inflation trends and future interest rate actions, further confusing financial markets. With both the US and UK economies going through tough times, market players are paying close attention to economic events and central bank actions that may determine financial conditions in the near term. TECHNICAL ANALYSIS GBP/USD still trades above important support levels, with its bullish trend close to recent highs. The pair recently reached a two-month high of 1.2674, reflecting strong buying interest. The price stays over the 50-day and 200-day moving averages, indicating an upward trend. Yet, resistance in the vicinity of 1.2700 can be a test, while short-term support is seen around 1.2600. Momentum indicators like the RSI indicate that the pair is heading towards overbought levels, so it can result in short-term consolidation prior to the next big move. Traders will be looking for confirmation cues to see if the pair is capable of maintaining its upward move or experience a pullback. FORECAST GBP/USD might continue to climb if sentiment remains bullish in the markets and economic indicators support the Pound. An extended breakout over the major resistance of 1.2700 might create opportunities for additional upward momentum, and the next critical resistance levels might be found near 1.2750 and 1.2800. Any weakness in upcoming US economic data, particularly in employment or inflation figures, could pressure the US Dollar further, allowing GBP/USD to climb higher. Additionally, if the Federal Reserve signals a dovish stance or hints at potential rate cuts sooner than expected, the Pound may find additional support. Positive developments in global trade, particularly between the US and China, could also boost risk appetite and drive demand for GBP. To the negative, GBP/USD can be pressured if economic issues in the UK become more severe or if risk appetite declines. Failure to stay above 1.2600 support could result in weakening towards 1.2550 and 1.2500. Any indication of UK economic data worsening, particularly in growth and employment, would cause market sentiment to turn against the Pound. Also, if the Federal Reserve becomes more hawkish, shoving back rate cut expectations, the US Dollar

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Currencies GBP/USD

Pound Sterling Appreciates on Market Sentiment: GBP/USD Tests Critical Resistance as Investors Look to Economic Releases

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  • February 20, 2025
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The Pound Sterling (GBP) has appreciated against the US Dollar (USD), trading at 1.2615 as market sentiment continues to improve. Investor sentiment has improved after President Trump’s moderated approach to tariffs and continued talks of a possible Russia-Ukraine ceasefire. Yet, doubts persist regarding the Federal Reserve’s monetary policy, as the most recent FOMC minutes emphasize ongoing inflation threats from possible tariff effects. The economic outlook for the UK is also uncertain, with Bank of England (BoE) Governor Andrew Bailey indicating weak growth and labor market deceleration. The British pound is capped at 1.2620, with future UK Retail Sales and S&P Global PMI figures set to dictate further price movements. KEY LOOKOUTS • Investors look forward to January’s retail sales report, which will give them an idea of consumer spending patterns and the general health of the UK economy. • The initial UK and US PMI readings for February will reflect economic activity patterns and may determine the short-term direction of the Pound Sterling. • FOMC minutes indicate sustained high interest rates based on inflation threats, which could maintain the US Dollar strong against the Pound Sterling. • The 1.2620 level of resistance and 1.2250 support zone are very important in specifying the next possible breakout or correction in the currency pair. The Pound Sterling’s shift against the US Dollar is dependent on several significant determinants, such as future UK Retail Sales figures and S&P Global PMI reports, due to release and offering new economic activity and consumer confidence insights. As for its counterpart, the Federal Reserve’s recent conservative position regarding interest rates, reflected in the most recent FOMC minutes, emphasizes inflationary pressures fueled by possible US tariff measures. This could keep the US Dollar strong, limiting GBP/USD upside potential. On the technical front, the pair faces resistance at 1.2620, aligned with the 100-day EMA, while key support rests at 1.2250. Market sentiment remains a key driver, with geopolitical developments and risk appetite influencing short-term trends. The Pound Sterling’s action against the US Dollar continues to be guided by UK Retail Sales figures, PMI data, and the Federal Reserve’s interest rate stance. With 1.2620 acting as resistance and 1.2250 as support, geopolitical concerns and market sentiment will dictate the direction of the currency pair. • GBP/USD is trading at 1.2615 as market sentiment picks up pace, boosted by diminishing fears about Trump’s tariff policies and optimism in geopolitics. • Investors look forward to January’s retail sales figures, which will give an indication of consumer expenditure and possible economic recovery. • The UK and US February preliminary PMI figures will be instrumental in determining business activity and economic resilience. • The FOMC minutes indicate sustained high interest rates as a result of inflation fears, which may favor the US Dollar. • UK CPI increased more than expected, but the BoE is still hesitant to cut rates further due to economic weakness. • GBP/USD is resisted at 1.2620 and major support at 1.2250, where it will make its next move. • Market sentiment is influenced by news regarding Trump’s trade policies and continued Russia-Ukraine peace talks. The movement of the Pound Sterling is now being dictated by wider economic and geopolitical events. Investors are following UK Retail Sales figures and S&P Global PMI closely, which will paint a clearer picture of economic activity and consumer confidence. A better-than-anticipated retail performance will indicate strength in the UK economy, while PMI figures will reveal business conditions in the UK and US. Also, recent inflation data have indicated a short-term spike, and as a result, the Bank of England has kept monetary policy tight. Governor Andrew Bailey has already cautioned that growth could be slow, and any additional policy moves will be based on new data. GBP/USD Daily Price Chart TradingView Prepared by ELLYANA On the international front, market sentiment has been better because of a more cautious approach by President Trump on trade policies. Although early fears about tariffs on Chinese imports and other major sectors caused volatility, Trump’s recent statements on a potential trade deal with China have calmed fears. But uncertainty persists as there is no clear plan on tariff implementation. While meanwhile, talks on a possible Russia-Ukraine ceasefire have also fostered a risk-positive sentiment, though Ukraine dismissed any agreement in the absence of its direct participation. As conditions in the world economy and politics change, investors will be careful, keeping an eye on critical events that would affect market stability. TECHNICAL ANALYSIS GBP/USD currency pair is fighting to sustain above the 1.2600 level, and resistance is situated at 1.2620, which is coinciding with the 100-day Exponential Moving Average (EMA). The duo is now oscillating around the 38.2% Fibonacci retracement point, calculated from the September-end high to the January-middle low, which represents a key area for possible breakout or pullback. The 14-day Relative Strength Index (RSI) is barely managing to stay above 60.00, and if it fails to hold above this level, it could signal weakening bullish momentum. On the negative side, major support is at 1.2250, and a fall below this level may initiate further selling pressure. To have a stronger uptrend, GBP/USD must break above the 50% Fibonacci retracement at 1.2767, which would signal a continuation of bullish sentiment. FORECAST The potential for the upside in GBP/USD relies on better market sentiment and major economic data releases. If UK Retail Sales for January and February S&P Global PMI reports surpass predictions, this is likely to be a confidence booster for the UK economy, driving the Pound upward. Favorable change in Brexit developments or better-than-forecasted employment statistics are additional strengths for the currency. Furthermore, if the Federal Reserve is hinting at a softer approach towards interest rates in light of slowing inflation, the US Dollar might depreciate, leaving GBP/USD more space to move upwards. Breaking above the resistance level of 1.2620 might signal more upward gains towards the 1.2767 area, suggesting positive momentum. On the negative, any indication of economic weakness within the UK, for example poor retail sales or a fall

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