CFD Trading Rate Great Britain Pound vs US Dollar (GBPUSD)

• GBP/USD gains ground possibly as traders project annual UK GDP to expand in Q4 2024.
• BoE’s Catherine Mann expressed concerns over weakening demand in the United Kingdom.
• January’s inflation in January has reduced the likelihood of a dovish Fed stance for the June policy meeting.

GBP/USD extends its winning streak for the third consecutive day, trading around 1.2460 during Thursday’s Asian session. Traders await the UK’s preliminary Gross Domestic Product (GDP) data due later in the day. Economists expect a contraction in Q4 GDP, though the economy is projected to expand on an annual basis.

The outlook for the British economy remains uncertain, with Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann expressing concerns over weakening demand in the United Kingdom (UK) and the need for accommodative financial conditions.

Earlier this week, Mann told the Financial Times (FT) that demand conditions are significantly weaker than before. She had also advocated for a larger interest rate cut in last week’s policy meeting, where the BoE unanimously agreed to lower rates by 25 basis points (bps).

However, GBP/USD’s upside may be limited as persistent US inflation could strengthen expectations that the Federal Reserve (Fed) will maintain interest rates at 4.25%-4.50% for an extended period. According to the CME FedWatch Tool, the probability of a Fed rate cut in June has dropped to nearly 30% following the latest inflation data.

The US Bureau of Labor Statistics reported on Wednesday that the Consumer Price Index (CPI) rose 3.0% year-over-year in January, exceeding expectations of 2.9%. The core CPI, which excludes food and energy, increased to 3.3% from 3.2%, surpassing the forecast of 3.1%. On a monthly basis, headline inflation jumped to 0.5% in January from 0.4% in December, while core CPI rose to 0.4% from 0.2% over the same period.

• GBP/USD tested the low side on Wednesday, but remains steady near 1.2450.
• Cable markets are coiling ahead of the next round of UK GDP growth figures.
• US PPI inflation also in the barrel for Thursday after CPI inflation ticked higher.

GBP/USD is coiled around 1.2450, churning the charts near middling technical ground as Pound Sterling traders await the UK’s latest Gross Domestic Product (GDP) growth figures. US Consumer Price Index (CPI) inflation accelerated in January, and markets will be watching Thursday’s US Producer Price Index (PPI) for signs of further inflation factors to be passed onto consumers.

Preliminary UK GDP for 2024’s fourth quarter is due on Thursday. Median market forecasts are expecting an uptick in annualized growth figures, with annualized Q4 GDP expected to clock in at 1.1% versus the previous 0.9%. Outside of the overall improvement, the fourth quarter is expected to lag, forecast to come in at a -0.1% contraction QoQ versus the previous flat print of 0.0%.

Forex Today: Further US inflation gauges should rule the sentiment

On the US side, PPI inflation will face renewed scrutiny on Thursday. US CPI accelerated in January, with headline CPI inflation rising to 3.0% YoY versus the expected hold at 2.9%. The near end of the tail bore the brunt of the increase, with MoM CPI coming in at 0.5%. Markets expected MoM headline CPI to come in at 0.3% versus the last print of 0.4%.

Core US PPI inflation will be the heavy-hitter on Thursday. Median market forecasts expect the print to slightly decline to 3.3% YoY from 3.5%. However, Wednesday’s inflation uptick has investors on edge that US inflation is entrenching itself deeper in the US domestic economy.

GBP/USD price forecast

GBP/USD ran out of bullish gas on Wednesday, keeping bids strung along the midrange of a recent consolidation phase. Cable continues to churn just south of the 50-day Exponential Moving Average (EMA) near 1.2500, keeping price action under wraps as technical traders await signs of meaningful momentum in either direction.

GBP/USD daily chart

• GBP/USD hits a daily low of 1.2374 as US inflation jumps above 3%.
• The US Dollar strengthens as investors expect Fed's first rate cut until September 2025.
• If GBP/USD prints a daily close below 1.2400, sellers would target 1.2300.

The Pound Sterling slipped during the North American session after the latest United States (US) inflation report showed that prices continued to rise, pushing back expectations of a Federal Reserve rate cut in the first half of 2025. The GBP/USD trades at 1.2387, down 0.47%.

Pound dips as US inflation surges

Inflation reaccelerates in the US, as the US Bureau of Labor Statistics (BLS) reveals. The Consumer Price Index (CPI) rose above 3% YoY for the first time since June 2024. Month-over-month (MoM) figures jumped 0.5%, up from December’s 0.4%. In the meantime, excluding volatile items, CPI increased by 3.3% YoY from 3.2%, and MoM expanded by 0.4%, up from 0.2%, exceeding estimates of 0.3%.

After the data, investors expect the first rate cut until September, according to data from Prime Market Terminal. The swaps market had priced in 20 basis points of easing toward the September 17 meeting, down from last week’s 45 bps.

Source: Prime Market Terminal

In the UK, the National Institute of Economic and Social Research (NIESR) predicts the Bank of England (BoE) has little room to cut rates further and predicts the BoE will cut rates once in 2025 and again in 2026.

This week, traders are eyeing Fed Chair Jerome Powell's testimony at the US House of Representatives. Besides him, Atlanta’s Fed Bostic and Governor Waller would cross the wires.

In the UK, the docket will feature Gross Domestic Product (GDP) figures for Q4 2024. Economists expect the economy to contract by -0.1% QoQ, yet on an annual basis, they estimate growth of 1.1%, up from Q3's 0.9%.

GBP/USD Price Forecast: Technical outlook

GBP/USD price action indicates the pair remains tilted to the downside but is set to consolidate within the 1.2330 - 1.2450 area. The Relative Strength Index (RSI) suggests that momentum remains bearish, opening the door for further selling pressure in the pair.

A daily close below 1.2400 could sponsor a leg toward the February 11 low of 1.2332, followed by the February 3 low of 1.2248. On further weakness, 1.22000 is up next. Conversely, if GBP/USD rises past 1.2400 and challenges the 50-day Simple Moving Average (SMA) at 1.2475, the exchange rate could aim towards 1.2500.

Pound Sterling (GBP) is likely to continue to rise; 1.2500 is expected to provide strong resistance. In the longer run, for the time being, GBP is likely to trade in a 1.2310/1.2550 range, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

1.2500 is expected to provide strong resistance

24-HOUR VIEW: "We detected 'a tentative buildup in downward momentum' yesterday. We highlighted that this 'could lead to GBP edging lower today, but the major support at 1.2310 is unlikely to come into view.' GBP subsequently dropped to 1.2333 before staging a surprisingly strong advance, closing on a firm note at 1.2446 (+0.66%). While GBP is likely to continue to rise, any further advance is expected to face strong resistance at 1.2500. The major resistance at 1.2550 is unlikely to come under threat. To sustain the momentum, GBP must remain above 1.2400, with minor support at 1.2425." 

1-3 WEEKS VIEW: "Our latest narrative was from last Friday (09 Feb, spot at 1.2440), wherein 'for the time being, GBP is likely to trade in a 1.2310/1.2550 range.' There is no change in our narrative for now."

• GBP/USD could face challenges due to increased trade war tensions following Trump’s tariffs.
• The US Dollar may appreciate as Fed’s Powell signaled there is no urgency to cut interest rates.
• The British Pound may struggle as BoE’s Mann expressed dovish views on interest rate outlook on Tuesday.

GBP/USD remains steady after registering gains in the previous session, trading around 1.2450 during the Asian hours on Wednesday. However, the pair could face challenges as US President Donald Trump’s 25% tariff hike has increased trade war tensions.

Additionally, Fed Chair Jerome Powell’s cautious indication regarding the US policy outlook could provide support for the US Dollar (USD) and limit the upside of the GBP/USD pair. Powell said in his semi-annual report to Congress that the Fed officials “do not need to be in a hurry" to cut interest rates due to strength in the job market and solid economic growth. He added that US President Donald Trump's tariff policies could put more upward pressure on prices, making it harder for the central bank to lower rates.

Investors now await the release of the US Consumer Price Index (CPI) inflation data on Wednesday, which could shape expectations for the Fed’s monetary policy. Headline CPI inflation is projected to remain steady at 2.9% year-over-year, while core CPI inflation is expected to ease slightly to 3.1% from the previous 3.2%.

The Pound Sterling (GBP) may encounter headwinds after Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann expressed dovish views on interest rate guidance in a Tuesday interview with the Financial Times (FT).

BoE’s Mann stated that she had shifted her stance on policy, citing significantly weaker demand conditions. She also expressed confidence that inflation would align with the BoE’s 2% target later this year while noting a “non-linear” decline in employment.

• GBP/USD rose 0.6% on Tuesday, bolstered by Greenback outflows.
• Fed Chair Powell sees few moves on rates, tariffs expected to be reversed.
• US inflation data, UK GDP growth figures on the horizon.

GBP/USD recovered ground on Tuesday, snapping a three-day losing streak and recovering back into touch range of the 1.2450 level, rising around two-thirds of one percent on the day. Global FX markets sold off the US Dollar slightly as risk appetite softly recovers across the board, bolstered by a steady-handed appearance from Federal Reserve (Fed) Chair Jerome Powell and and expectations that the latest iteration of US President Donald Trump’s tariff threats will be averted by last-minute concessions, as has been the pattern since Donald Trump took over the White House.

• Fed’s Hammack: Likely appropriate to hold rates steady for some time
• Fed's Williams: US should grow by 2% in 2025, 2026
• Jerome Powell Testimony: Will commit to following data on tariff effects

UK data remains thin through the midweek sessions, but Cable traders will be on the lookout for Thursday’s UK Gross Domestic Product (GDP) print. UK GDP is expected to show a recovery to an annualized 1.1% during the fourth quarter, though the Q4 GDP QoQ print is expected to come in at a -0.1% contraction.

Forex Today: Key US CPI takes centre stage amid a cautious Fed

US Consumer Price Index (CPI) inflation will be the dominant print on Wednesday. Headline US CPI inflation is expected to hold at 2.9% YoY, while core CPI inflation is forecast to tick down to 3.1% versus the last print of 3.2%. US Producer Price Index (PPI) inflation follows up on Thursday, with core PPI business-level inflation expected to cool slightly to 3.3% YoY from 3.5%.

GBP/USD price forecast

Tuesday saw the GBP/USD shake off its near-term bearish momentum, cutting off a three-day losing streak and recovering some chart territory to reclaim a familiar midrange near 1.2450. The pair still remains hobbled just south of the 50-day Exponential Moving Average (EMA) near the 1.2500 handle.

GBP/USD daily chart

• GBP/USD rises 0.31%, boosted by weaker USD after Trump announces 25% metal tariffs.
• Risk aversion spikes with Wall Street braced for negative open; focus on Powell's upcoming testimony.
• BoE's Catherine Mann supports significant rate cut, yet upholds long-term higher rate outlook.

The British Pound resumed its uptrend early on Tuesday morning following the latest US President Trump tariff round, which included base metals like aluminum and steel. The Greenback weakened, as seen by the GBP/USD pair trading above 1.2400, gaining 0.31%.

British Pound ascends amid new US tariffs and cautious central bank rhetoric

Wall Street is set to open in the red, with traders turning risk-averse after Trump signed a proclamation to reimpose a 25% tariff on steel and aluminum imports, effective March 12. In the meantime, a slight economic docket, mainly driven by Federal Reserve speakers, leaves traders awaiting Fed Chair Jerome Powell's testimony at the US Congress.

In the meantime, Cleveland’s Fed President Beth Hammack commented that she favors holding rates steady for some time so the Fed can assess the economy. She added that policy is ‘modestly restrictive’ and emphasized that it is still unclear whether inflation will keep moving towards the Fed’s 2% goal.

Across the Pond, Bank of England (BoE) member Catherine Mann voted for a 50 basis points (bps) interest rate cut last week, joining Swati Dhingra. Mann was a well-known uber-hawk in the BoE.

Mann said that she still views restrictive monetary policy as necessary and sees the long-term R-star or neutral rate at the higher end of the 3.0% - 3.5% range, given by BoE's latest survey of investors. She added, “I choose 50 basis points now, along with continued restrictiveness in the future and a higher long-term Bank Rate to 'cut through the noise.’”

GBP/USD Price Forecast: Technical outlook

Given the fundamental backdrop, the GBP/USD extended its gains after printing an ‘inverted hammer’ preceded by a downtrend. Nevertheless, the downward pressure stills unless buyers clear the 50-day Simple Moving Average (SMA) at 1.2479, which could expose the latest cycle high at 1.2549, February’s 5 peak.

In that outcome, the GBP/USD would extend its rally and challenge the 100-day SMA at 1.2718. Conversely, if the pair drops below 1.2400, sellers could drive the exchange rate towards the February 3 daily low of 1.2248.

Tentative buildup in downward momentum could lead to Pound Sterling (GBP) edging lower; the major support at 1.2310 is unlikely to come into view. In the longer run, for the time being, GBP is likely to trade in a 1.2310/1.2550 range, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

GBP is likely to trade in a 1.2310/1.2550 range

24-HOUR VIEW: "Yesterday, we noted that 'there has been a tentative buildup in momentum.' We held the view that GBP 'could weaken today, but any decline is not expected to reach the major support at 1.2310 (minor support is at 1.2350).' The subsequent price action did not turn out as we expected, with GBP trading in a 1.2363/1.2420 range before closing lower by 0.27% at 1.2367. We continue to detect a tentative buildup in momentum, and this could lead to GBP edging lower today. However, the major support at 1.2310 is still unlikely to come into view. Note that there is a minor support level at 1.2330. The downward pressure will remain intact as long as 1.2405 (minor resistance is at 1.2385) is not breached." 

1-3 WEEKS VIEW: "Last Friday (09 Feb, spot at 1.2440), we indicated that 'for the time being, GBP is likely to trade in a 1.2310/1.2550 range.' While there has been a slight increase in downward momentum, we continue to hold the same view for now."

• GBP/USD depreciated as Trump expanded tariffs and nullified previous trade agreements with key US allies.
• President Trump raised import duty on steel and aluminum imports to a flat 25% without exceptions or exemptions.
• BoE’s Mann stated that UK businesses may face difficulties in raising prices this year due to job losses.

GBP/USD continues its downward trend for the fourth consecutive day, trading near 1.2350 during Asian hours on Tuesday. The pair weakens amid escalating trade tensions after US President Donald Trump imposed a flat 25% tariff on steel and aluminum imports on Monday, removing all exemptions and nullifying previous trade agreements with key United States’ (US) allies. The move is intended to support struggling domestic industries but increases the risk of a broader trade conflict.

Trump’s proclamations raised the US aluminum tariff from 10% to 25%, eliminating country-specific exemptions, quota deals, and numerous product-specific exclusions for both metals. A White House official confirmed the new tariffs will take effect on March 4, with potential further measures targeting microchips and vehicles in the coming weeks.

Meanwhile, Bank of England (BoE) Monetary Policy Committee member Catherine Mann stated late Monday that United Kingdom’s (UK) businesses may struggle to raise prices this year as job losses and weaker consumer spending dampen inflation, according to the Financial Times. Mann, who is scheduled to speak again, suggested that corporate pricing power is fading, reducing inflationary pressures. BoE Governor Andrew Bailey's remarks later on Tuesday will also be closely watched. 

In economic data, the British Retail Consortium (BRC) Like-for-Like Retail Sales in the UK increased by 2.5% year-on-year in January 2025, slowing from December’s 3.1% gain but surpassing market expectations of 0.2%. BRC Chief Executive Helen Dickinson noted that while the performance remains strong, its sustainability in the coming months remains uncertain.

• GBP/USD fell another third of a percent of Monday.
• Market sentiment is due for another knockback as fresh tariff threats surface.
• BoE Bailey, Fed Powell, US CPI inflation, and UK GDP all on the docket.

GBP/USD sunk for a third straight trading day on Monday, kicking off the new trading week on the backfoot and slipping back below the 1.2400 handle, shedding one-third of one percent in the process. US President Donald Trump renewed his vigor to kick off a US vs everybody else trade war late Monday, slapping a 25% tariff on all imported steel and aluminum into the US.

Read more: US President Donald Trump signs off on 25% tariffs on steel and aluminum

Bank of England (BoE) Governor Andrew Bailey is due to give a keynote speech on Tuesday. Cable traders will be keeping an eye on the BoE head following the UK central bank’s rate cut last week, looking to nail down any hints of forward guidance on where the BoE could be heading next. Federal Reserve (Fed) Chair Jerome Powell follows up with an appearance of his own, testifying before the US Senate Banking Committee on Tuesday.

The key datapoints this week will be US Consumer Price Index (CPI) inflation slated for Wednesday, as well as UK Gross Domestic Product (GDP) and US Producer Price Index (PPI), both due on Thursday. 

GBP/USD price forecast

GBP/USD has chalked in a second straight rejection from the 50-day Exponential Moving Average (EMA) near 1.2500, setting the stage for a continued decline. Price action is tilting back toward the 1.2300 handle, and near-term momentum has shifted firmly bearish. Cable has printed three straight down days after failing to recapture the 1.2500 level, and the bullish recovery from January’s lows near 1.2100 has officially run out of steam.

GBP/USD daily chart

• GBP/USD edges down after Trump's new tariffs on aluminum and steel, hinting at further measures.
• Market eyes key events: Fed Chair Powell's testimony and upcoming US inflation data.
• BoE's Catherine Mann speech eyed after shifting from hawkish to favoring substantial rate cuts.

The British Pound retreats during the North American session as the Greenback post solid gains after US President Donald Trump said he would impose tariffs on base metals. The GBP/USD trades at 1.2385. down 0.16%.

British Pound drops after new US tariff announcements, Central Bank speeches up next

Market sentiment is upbeat despite Trump’s tariff rhetoric, who said on Sunday that they would impose 25% tariffs on aluminum and steel. Furthermore, he added that reciprocal tariffs could be levied as soon as Tuesday or Wednesday.

An absent economic docket leaves traders adrift to comments of Central Bank speakers like Catherine Mann of the Bank of England (BoE) on February 11, who voted for a 50-basis points (bps) rate cut last week, after being one of the most hawkish members of the BoE.

Across the pond, traders are eyeing Federal Reserve Chair Jerome Powell's testimony at the US Congress on Tuesday. In addition, US inflation figures are expected to remain near the 3% threshold, while Retail Sales are expected to show a minimal contraction in January.

GBP/USD Price Analysis: Technical outlook

From a technical standpoint, the GBP/USD remains biased downward after the pair hit a daily high of 1.2421; buyers failed to cling to gains above 1.2400. On further weakness, the pair might test the February 6 low of 1.2359, followed by the February 3 daily low of 1.2249.

Conversely, a daily close above 1.2400 could allow the 50-day Simple Moving Average (SMA) to be tested at 1.2486 ahead of the 1.2500 mark.

The Pound Sterling (GBP) could weaken; any decline is not expected to reach the major support at 1.2310. For the time being, GBP is likely to trade in a 1.2310/1.2550 range, UOB Group's FX analysts Quek Ser Leang and Peter Chia note. 

GBP is not expected to reach the major support at 1.2310

24-HOUR VIEW: "We indicated last Friday that the outlook for GBP 'is mixed'. We were of the view that it could trade in a choppy manner, likely between 1.2390 and 1.2500.' In NY trade, GBP popped to a high of 1.2490 and then plummeted to 1.2377. There has been a tentative buildup in momentum, but while GBP could weaken today, any decline is not expected to reach the major support at 1.2310 (minor support is at 1.2350). Resistance is at 1.2435; a breach of 1.2465 would indicate that GBP is not weakening further." 

1-3 WEEKS VIEW: "Last Friday (09 Feb, spot at 1.2440), we indicated that 'for the time being, GBP is likely to trade in a 1.2310/1.2550 range.' There is no change in our view."

• GBP/USD struggles to capitalize on intraday uptick amid a modest USD strength.
• The divergent Fed-BoE outlook further contributes to capping the currency pair.
• The setup seems tilted in favor of bears and supports prospects for deeper losses.

The GBP/USD pair rebounds a few pips from the Asian session low and currently trades around the 1.2400 round-figure mark, nearly unchanged for the day. The upside, however, remains capped in the wake of a modest US Dollar (USD) strength, which, in turn, warrants some caution for bullish traders. 

US President Donald Trump's fresh tariff threats boost demand for the traditional safe-haven Greenback. Meanwhile, the upbeat US employment details released on Friday, along with expectations that Trump's protectionist policies would reignite inflation, should allow the Federal Reserve (Fed) to hold rates steady and lend additional support to the USD. Apart from this, the Bank of England's (BoE) gloomy outlook should contribute to capping the GBP/USD pair.

Even from a technical perspective, the recent repeated failures near the 50-day Simple Moving Average (SMA) suggest that the path of least resistance for the GBP/USD pair is to the downside. Hence, any subsequent move up could be seen as a selling opportunity and remain capped near the 1.2500 psychological mark. The latter should act as a key pivotal point for short-term traders, which if cleared decisively should pave the way for additional near-term gains.

The GBP/USD pair might then accelerate the positive move towards the 1.2575-1.2580 region en route to the 1.2600 round figure. The momentum could extend further towards the 1.2645-1.2650 intermediate hurdle, above which spot prices could aim to challenge the 100-day SMA, currently pegged near the 1.2715-1.2720 region. 

On the flip side, weakness below the 1.2375-1.2370 immediate support could make the GBP/USD pair vulnerable to weaken further below the 1.2300 round figure, towards testing last week's swing low, around mid-1.2200s. Some follow-through selling should pave the way for a fall toward the next relevant support near the 1.2175 region.

GBP/USD daily chart

• GBP/USD softens to around 1.2390 in Monday’s Asian session, losing 0.14% on the day. 
• Trump said he will announce reciprocal tariffs on many countries this week.
• BoE’s Bailey reiterated that a “gradual and careful approach to monetary policy remains appropriate.”

The GBP/USD pair weakens to near 1.239 during the Asian trading hours on Monday. The US Dollar climbs after US President Donald Trump promised reciprocal tariffs. The release of the US Consumer Price Index (CPI) for January will take center stage later on Wednesday. 

Trump said on Friday that he would announce reciprocal tariffs on Tuesday or Wednesday on countries that tax US imports, with them going into effect 'almost immediately'. 

Tariffs on UK goods exported to the US may still be on the cards, though Trump has said a deal “can be worked out." Traders will closely watch the developments surrounding more tariff policies from Trump. Any signs of escalating trade war tensions could boost the safe-haven USD. 

The expectation of further rate cuts by the Bank of England (BoE) could undermine the Pound Sterling (GBP). BoE Governor Andrew Bailey said that additional rate reductions should be expected but that “we will have to judge meeting by meeting how far and how fast.". Bailey added during the press conference that economic activity is weakening and the jobs market is slowing down. Markets are currently pricing in another 50 basis points (bps) of cuts in 2025.

• GBP/USD ascends to 1.2451, buoyed by disappointing US NFP figures showing only 143K jobs added.
• US unemployment rate improves to 4%, with a notable increase in Average Hourly Earnings hinting at robust consumer spending.
• Market anticipates Fed rate cut in June 2025, while recent BoE rate cut minimally impacts Pound's performance.

The Pound Sterling registered gains versus the US Dollar on Friday following a softer-than-expected US Nonfarm Payrolls report. The GBP/USD seesawed within a 1.2418 – 1.2491 range and traded at 1.2451, up 0.15%.

The Pound appreciates following a weak US jobs report

January US NFP data was softer than expected, with the economy adding 143K people to the workforce, below the 170K estimated. The Unemployment Rate ticked lower from 4.1% to 4%, a sign that the labor market remains strong. At the same time, Average Hourly Earnings surged, which would likely keep consumer spending strong.

Following the data, futures linked to the Fed funds rate showed that traders estimate the Fed’s first rate cut in 2025 will be in June, as expected following the US Central Bank's first policy meeting.

Meanwhile, the Pound remained unfazed after the Bank of England (BoE) cut rates by 25 basis points on Thursday, reducing the interest rate differential between the US and the UK.

Recently, the University of Michigan revealed that Consumer Sentiment deteriorated in its preliminary February reading, with the index dipping from 71.1 to 57.8, as expected.

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend remains intact, but in the short term, it could rise toward the 50-day Simple Moving Average (SMA) at 1.2493. If buyers clear the latter the 1.2500 psychological level is up next.

Momentum turned bullish, as depicted by the Relative Strength Index (RSI). If GBP/USD achieves a daily close above 1.2500, buyers could drive the exchange rate to its December 30 peak of 1.2607.

On the other hand, if GBP/USD tumbles below 1.2450, the next support would be the February 6 swing low of 1.2359, ahead of 1.2300.

Outlook is mixed; GBP could trade between 1.2390 and 1.2500. In the longer run, for the time being, GBP is likely to trade in a 1.2310/1.2550 range, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

GBP cad continue to trade in a choppy manne

24-HOUR VIEW: “Yesterday, we expected GBP to ‘consolidate in a 1.2460/1.2540 range.’ Our expectation was incorrect, as GBP plummeted to 1.2361 before rebounding strongly to close at 1.2438 (-0.54%). The price action has resulted in a mixed outlook. Today, GBP could continue to trade in a choppy manner, likely between 1.2390 and 1.2500.”

1-3 WEEKS VIEW: “Following GBP rise to 1.2550 two days ago, we indicated yesterday (06 Feb, spot at 1.2505) that ‘upward momentum is increasing, but not enough to suggest a sustained advance.’ We added, ‘for a sustained advance, GBP has to break and remain above 1.2550.’ Yesterday, GBP plummeted to a low of 1.2361. The breach of our ‘strong support’ level of 1.2370 indicates that the buildup in momentum has faded. To put it another way, GBP is not ready to break above 1.2550. For the time being, it is likely to trade in a 1.2310/1.2550 range.”

• GBP/USD remains depressed for the second straight day amid the BoE’s dovish outlook.
• The BoE cut interest rates by 25 bps on Thursday and signaled further rate cuts this year. 
• Subdued USD price action helps limit the downside ahead of the crucial US NFP report.

The GBP/USD pair struggles to capitalize on the overnight bounce from a multi-day low and trades with a mild negative bias, around the 1.2425 area during the Asian session on Friday. This marks the second straight day of a downtick, though it lacks follow-through as traders seem reluctant to place aggressive bets and opt to wait for the release of the US monthly jobs data. 

The popularly known Nonfarm Payrolls (NFP) report is expected to show that the world's largest economy added 170K jobs in December, down from 256K in the previous month. Meanwhile, the Unemployment Rate is expected to hold steady at 4.1%. This, along with Average Weekly Earnings, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the GBP/USD pair. 

Heading into the key data risk, expectations that the Federal Reserve (Fed) will stick to its easing bias and lower borrowing costs twice by the end of this year keep the US Treasury bond yields depressed near their lowest level since December. This, in turn, fails to assist the USD to attract any meaningful buyers and might act as a tailwind for the GBP/USD pair, though the Bank of England's (BoE) gloomy outlook should cap the upside. 

In fact, the UK central bank lowered its benchmark interest rate by 25 basis points on Thursday and downgraded the growth forecast for 2025. Adding to this, BoE Governor Andrew Bailey told reporters that the central bank expects to make further rate cuts this year. This might continue to undermine the British Pound (GBP) and suggests that the path of least resistance for the GBP/USD pair remains to the downside.

• GBP/USD briefly tumbled back below 1.2400 after the BoE cut rates again.
• Despite the rate cut, BoE tones struck a hawkish chord, crimping further bets.
• US NFP Friday looms large ahead to cap off the trading week.

GBP/USD shuddered on Thursday, punching in a technical rejection from key averages and testing below the 1.2400 handle. The Bank of England (BoE) trimmed interest rates by another 25 bps, but struck a hawkish tone that saw rate markets tune down their bets of further rate cuts through the remainder of 2025.

According to rate markets, the BoE will likely make another two or three rate cuts through the year. All nine members of the Monetary Policy Committee (MPC) voted for a rate cut, with seven voting for a 25 bps rate trim and two particularly-dovish members voting for a double-cut for 50 bps. Despite the accelerated eagerness of policymakers to deliver a February rate cut, markets only expect another 70 or so basis points to be taken off the BoE’s reference rate this year.

Another Nonfarm Payrolls (NFP) jobs data dump looms on Friday. Net job additions are expected to ease to 170K in January, down from December’s print of 256K. Revisions to older data will be closely watched this week. Post-print revisions drifted toward the stronger side during 2024, frustrating market participants hoping for cracks in the US employment landscape to help push the Federal Reserve (Fed) toward more rate cuts.

GBP/USD price forecast

Thursday’s bearish pullback saw GBP/USD price in a technical rejection of the 50-day Exponential Moving Average (EMA), touching an intraday low near 1.2350. The pair settled the day a little south of 1.2450, but further bearish momentum could be on the cards as bulls struggle to sustain momentum.

GBP/USD daily chart

• GBP/USD falls 0.93%, hitting a session low of 1.2359 after BoE's unexpected rate decision.
• BoE's dovish stance intensifies with forecasts of significant easing by end of 2025, stirring market reactions.
• Contrast in Fed and BoE policies likely to favor USD strength.

The Pound Sterling fell during Thursday’s North American session, down 0.79% after the Bank of England (BoE) reduced the Bank Rate by 25 basis points. Therefore, the GBP/USD tumbled below 1.2400 and hit a daily low of 1.2359. At the time of writing, the pair trades at 1.2405.

GBP/USD nosedives below 1.2400 following a surprising 25 basis point cut by the Bank of England

As expected, the BoE lowered rates to 4.50%, though surprisingly. Two members voted for a “larger size” rate cut, with Catherine Mann, one of the hawkish members, being one of them. Following the UK’s Central Bank decision, investors rushed to price 65 basis points (bps) of easing towards the end of 2025.

Additionally, the BoE updated their forecasts. The British economy is expected to grow by 0.75% and inflation to rise from 2.5% to 3.7%. BoE’s Governor Andrew Bailey said he hopes to be able to cut rates further, yet they would take their decisions “meeting by meeting.” He added that although headline inflation edged higher, he sees “continued gradual easing of underlying inflationary pressures.”

Across the pond, US Initial Jobless Claims missed the mark for the week ending February 1. The number of Americans filing for unemployment benefits rose by 219K, up from 208K the previous week and exceeded forecasts of 213K.

Given the backdrop, further GBP/USD downside is seen. The Federal Reserve is expected to keep rates on hold while the BoE continues to ease policy. Therefore, the divergence amongst Central Banks might benefit the Greenback.

The UK economic docket will comprise BoE officials crossing the wires this week. In the US, nonfarm payroll figures for January and Fed speakers could dictate the direction of GBP/USD.

GBP/USD Price Forecast: Technical outlook

After the BoE’s decision, the GBP/USD hit a three-day low of 1.2359 before recovering some ground. Nevertheless, failure to clear the 50-day Simple Moving Average (SMA) of 1.2497 has opened the door for further downside. A daily close below 1.2400 would shift the trend downwards and pave the way for challenging the February 3 low of 1.2248.

On the other hand, if GBP/USD stays above 1.2400, buyers must clear the 50-day SMA to test the 1.2500 mark in the near term.