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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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Currencies GBP/USD

GBP/USD Falls Before UK Labor Market Figures: Most Important Factors Contributing to the Market Decline

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  • February 18, 2025
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GBP/USD has fallen around 1.2600 before important UK labor market figures, ending its five-day streak of gains. Traders expect an increase in unemployment and claimant count, which may weigh on the British Pound. UK PM Keir Starmer’s demand for a “US backstop” in a Ukraine peace agreement also brings geopolitical uncertainty. On the American side, the Dollar rallies on increasing Treasury yields and dovish Fed comments, with policymakers reiterating that inflation threats remain. From a technical point of view, GBP/USD is approaching major support at 1.2600, with additional selling potential if numbers are disappointing. Investors are closely watching UK job data and Fed policy cues for the next move. KEY LOOKOUTS • UK labor figures are awaited by traders, as the unemployment rate is predicted to increase to 4.5%, influencing GBP/USD. • UK PM Keir Starmer demands any peace agreement for Ukraine should come with a “US backstop” to prevent future Russian incursions. • Higher US Treasury yields and hawkish tone of Fed policymakers maintain the US Dollar strong, exerting pressure on GBP/USD. • Fed Governor Michelle Bowman cautions against ongoing inflation risks, proposing additional data should be seen before cuts in interest rates. GBP/USD comes under selling pressure, falling around 1.2600 as market participants look forward to pivotal UK labor market information. The anticipated increase in unemployment and claimant count might act as a drag on the British Pound. In the meantime, UK Prime Minister Keir Starmer stressed the importance of a “US backstop” in any peace deal for Ukraine to discourage further Russian aggression. Conversely, the US Dollar strengthens as Treasury yields rise, buoyed by dovish comments from Fed officials. Fed Governor Michelle Bowman cautioned that inflation risks remain, indicating that more clarity is required before rate cuts can be considered. These together form the near-term direction for GBP/USD. GBP/USD falls close to 1.2600 as markets await UK labor figures, where unemployment is anticipated to increase. Meanwhile, the US Dollar firm up due to higher Treasury yields and dovish stance of Fed officials regarding inflation. UK PM Keir Starmer’s demand for a “US backstop” in peace negotiations for Ukraine brings in geopolitical risk. • The duo falls to around 1.2600 prior to the highly important UK labor market numbers, snapping its five-day success run. • The jobless rate is expected to climb to 4.5%, while the claimant count should increase by 10K, which will influence GBP sentiment. • UK PM Keir Starmer emphasizes that any peace agreement for Ukraine must be accompanied by a “US backstop” to prevent Russian aggression in the future. • The US Dollar Index (DXY) bounces back on the back of surging Treasury yields and hawkish Fed comments, putting pressure on GBP/USD. • Fed Governor Michelle Bowman reiterates ongoing inflation threats, emphasizing added clarity is necessary before rate cuts are on the cards. • Investors hold back following Fed Governor Waller’s concession of slower inflation gains, adding to doubt on monetary policy action. • Geopolitical tensions and economic uncertainty propel GBP/USD volatility, and investors are focusing intently on forthcoming data announcements. GBP/USD has declined close to 1.2600 prior to the release of UK labor market data, bringing an end to its five consecutive days of advances. Investors closely observe the job numbers, which are anticipated to increase the unemployment rate to 4.5% and to grow the claimant count by 10K. A weaker-than-expected labor market could weigh further on the British Pound, adding to its recent decline. Meanwhile, UK Prime Minister Keir Starmer emphasized the need for a “US backstop” in any Ukraine peace deal to prevent future Russian aggression, adding a geopolitical dimension to market sentiment.  GBP/USD Daily Price Chart TradingView Prepared by ELLYANA On the American side, the Dollar is strengthening on the back of rising Treasury yields and cautious comments from Federal Reserve officials. The US Dollar Index (DXY) has risen after three consecutive days of decline as 2-year and 10-year Treasury yields are at 4.27% and 4.51%, respectively. Fed Governor Michelle Bowman has cautioned that inflation risks are still high and cautioned against moves to cut rates before more clarity is evident. In the same vein, Fed Governor Christopher Waller recognized sluggish progress in curbing inflation, cementing doubt about future policy action. All these factors combined point to GBP/USD’s bearish risk as investors wait for crucial economic indicators. TECHNICAL ANALYSIS GBP/USD is confronted with short-term support around the 1.2600 psychological mark, with a further drop possibly challenging the 1.2570 and 1.2530 support levels. A fall below these levels may create room for a more significant pullback to 1.2500. On the positive side, resistance is observed at 1.2650, followed by the recent high at 1.2700. The Relative Strength Index (RSI) is also turning down, reflecting bearish momentum, while the 50-day moving average at 1.2620 may serve as a dynamic resistance. Traders will be observing if GBP/USD can maintain above crucial support levels or continue its downside move in the face of fundamental pressures.  FORECAST If the UK labor market data surprises positively, showing resilience in employment figures, GBP/USD could regain strength. A better-than-expected jobs report might boost investor confidence in the British economy, pushing the pair towards the 1.2650 resistance level. If buying momentum continues, the next upside target would be 1.2700, followed by 1.2750, where significant resistance lies. Also, any dovish indications from the Federal Reserve for upcoming rate cuts may bring down the US Dollar, which will help propel a GBP/USD recovery. Conversely, if UK jobs data fail to impress with rising unemployment and an increased claimant count, GBP/USD may witness selling pressure. A fall below the important 1.2600 support could see further declines towards 1.2570 and 1.2530. Further, a more hawkish US Dollar, fueled by Fed hawkish commentary and an increase in Treasury yields, may hasten the losses. Should bearish pressure continue, GBP/USD might fall to the 1.2500 psychological support, testing 1.2450 in a protracted downtrend.

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Currencies GBP/USD

GBP/USD Under Pressure Below 1.2200 After Soft UK Inflation Data

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  • January 16, 2025
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GBP/USD is under pressure, trading around 1.2220 after two days of gains, following softer-than-expected inflation data from the UK. The Consumer Price Index (CPI) for December showed a smaller-than-anticipated increase, which could provide the Bank of England with room to cut interest rates in February. As such, the Pound faces headwinds, especially against a weakening USD, despite lower-than-expected US Producer Price Index (PPI) figures. Technically, GBP/USD remains above the 23.6% Fibonacci retracement level but needs a sustained break above the 1.2240 resistance to regain bullish momentum. However, a drop below 1.2200 may trigger further downside towards 1.2150 or even 1.2100, especially if US inflation data later in the week influences market expectations for Federal Reserve policy. KEY LOOKOUTS • Readings could pave the way for potential interest rate cuts by the Bank of England, weighing on the Pound’s strength against the USD. • To maintain the momentum, GBP/USD needs to break above 1.2240 resistance and then target 1.2280 and 1.2300. • US Consumer Price Index is going to play a significant role in determining the Federal Reserve rate outlook, thus affecting USD dynamics and GBP/USD price action. • Optimism over US trade policies and ease concerns over the Fed rate cuts could cap the further USD weakness and give some support to the GBP/USD pair. GBP/USD major key watch items would be UK inflation data that will impact the decision of interest rate cuts from the Bank of England, putting even more pressure on the Pound. Technically, the pair faces resistance around 1.2240, and a break above this level could take it towards 1.2300. Additionally, the US Consumer Price Index report that is due out soon will be crucial in forming expectations for Federal Reserve policy, which may influence the strength of the USD. Finally, the overall market sentiment about US trade policies and economic conditions will also determine the short-term direction for GBP/USD. The immediate direction of the GBP/USD would depend on the UK inflation report, possible rate cuts by the BoE, technical resistance around 1.2240, and US CPI. • Softer-than-expected CPI data in December might provide the BoE with space to cut interest rates, hurting the Pound. • The pair is resisting at around 1.2240; a sustained break above this point could take the pair towards 1.2300 and other higher Fibonacci levels. • US PPI data was weak, which contributed to a softer USD in the short term. • The US Consumer Price Index (CPI) release will be important in shaping expectations for the Federal Reserve’s interest rate policy. • Optimism over US economic conditions and easing trade concerns could provide support to the USD, limiting further Pound gains. • The 23.6% Fibonacci retracement level at 1.2200 is critical, and there is a potential for further upward movement if GBP/USD can break above 1.2240. • The daily RSI for GBP/USD has started to show signs of being oversold, which might suggest a bounce near key support levels like 1.2150-1.2100. GBP/USD is under pressure as softer-than-expected UK inflation data increase the chances of possible interest rate cuts by the Bank of England. Consumer Price Index for December came in at 2.5% below expectations, and that has led to concerns whether the UK economy may indeed be easing inflationary pressures, especially concerning stagflation risks. The pair is technically holding above the 23.6% Fibonacci retracement level at 1.2200; however, much upside remains dependent upon a clear break above the resistance zone at 1.2240. The US Consumer Price Index for April will also determine the way ahead for Federal Reserve monetary policy and USD movements in the coming weeks. A less-than-expected print on CPI would further keep USD pressure low, but a better print would likely increase the chances of a strengthening dollar. Improved US economic conditions as trade tension issues ease should add to support the USD as well. Traders will be focusing closely on both US and UK data flows in the next days, which will probably decide the major market moves for the GBP/USD in the near future. TECHNICAL ANALYSIS From a technical view point, GBP/USD is holding above the short-term support at the 23.6% Fibonacci retracement level at 1.2200. A break above the 100-hour Exponential Moving Average (EMA) at 1.2240 can sustain higher, where 1.2280 represents a possible area on the 38.2% Fibonacci level. Further strength might take the price to the 1.2300 region and the 1.2315 resistance area. If the price drops below 1.2200, some of the significant support levels include 1.2150-1.2140 and then 1.2100. A clear violation below 1.2100 would most probably establish a continuation of the broader trend, leaving it open to a further drop. GBP/USD Daily Price Chart Sources: TradingView, Prepared By ELLYANA. FORECAST If GBP/USD breaks above the immediate resistance at 1.2240 (100-hour EMA), then it could make its way toward the next key resistance at 1.2280, which also coincides with the 38.2% Fibonacci retracement level. Further up, the pair may push toward 1.2300, followed by the 1.2315 resistance zone. A strong break above 1.2315 may signal a potential rally toward the 50% Fibonacci level at 1.2335, further extending gains. On the negative side, if GBP/USD cannot sustain a rally above 1.2200, then a move below that support may find the next strong support in the region of 1.2150-1.2140. A breach of that zone may see 1.2100 in the near future. Once 1.2100 falls, then recent lows might be seen, thus continuing the major downtrend and bringing possible targets in the vicinity of 1.2050 or even 1.2000.

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