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

Chance for Pound Sterling (GBP) to edge higher vs US Dollar (USD), but it is unlikely to break clearly above 1.2655. In the longer run, further GBP strength appears likely; the focus is at 1.2655, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Further GBP strength appears likely

24-HOUR VIEW: We highlighted yesterday that 'while there is scope for GBP to continue to edge higher, any advance is likely part of a higher trading range of 1.2580/1.2655.' We also highlighted that GBP 'is unlikely to break clearly above 1.2655.' Our expectation did not quite turn out as after dipping to a low of 1.2583, GBP rose but only touched 1.2628. Although upward momentum has not increased much, there is still a chance for GBP to edge higher today. However, a clear break above 1.2655 still seems unlikely. On the downside, support levels are at 1.2600 and 1.2580."

1-3 WEEKS VIEW: "Our update from two days ago (17 Feb, spot at 1.2580) is still valid. As highlighted, 'further GBP strength appears likely, and the focus now is at 1.2655.' Overall, only a breach of 1.2525 (no change in ‘strong support’ level) would mean that the GBP strength that started late last week has faded."

• GBP/USD appreciates as the US Dollar loses ground amid lower Treasury yields.
• Trump shared plans to impose a 25% tariff on foreign cars, with higher duties expected on semiconductor chips and pharmaceuticals.
• Traders await the UK Consumer Price Index (CPI) data for fresh insights into the BoE’s policy outlook.

GBP/USD remains firm after losses in the previous session, trading around 1.2610 during the Asian session on Wednesday. Traders await the release of January’s Consumer Price Index (CPI) data from the United Kingdom (UK) scheduled to be released later in the day. The Pound Sterling (GBP) could see significant movement in response to the inflation report, which may influence the Bank of England’s (BoE) interest rate-cut strategy amid ongoing inflationary pressures.

The pair finds support as the US Dollar (USD) struggles amid falling Treasury yields, despite ongoing caution regarding the Federal Reserve’s (Fed) policy outlook. Investors await the release of the FOMC Minutes later in the North American session.

The US Dollar Index (DXY), which measures the USD against six major currencies, has edged lower to around 107.00. Meanwhile, US Treasury yields stand at 4.30% for the 2-year note and 4.54% for the 10-year note at the time of writing.

On Tuesday, San Francisco Fed President Mary Daly noted that while US economic conditions remain positive, the outlook for rate cuts in 2025 remains uncertain. Philadelphia Fed President Patrick Harker reinforced the need for a steady interest rate policy, citing persistent inflation concerns.

However, the USD could regain strength as risk sentiment shifts following fresh tariff threats from US President Donald Trump. According to Bloomberg, Trump stated on Tuesday that he plans to impose a 25% tariff on foreign cars, with higher duties also expected on semiconductor chips and pharmaceuticals. He indicated that an official announcement could come as soon as April 2.

• GBP/USD dips 0.16% to 1.2605 on Tuesday after reaching its highest level since mid-January.
• RSI declines to 62, indicating a slowdown in bullish momentum, while MACD remains flat with green bars.
• The pair eyes the 100-day SMA at 1.2660, with UK inflation and Retail Sales data set to provide direction.

GBP/USD retreated slightly on Tuesday, edging down 0.16% to 1.2605 after an extended rally that propelled it to its highest level since mid-January. Despite this mild pullback, the broader outlook remains constructive, as the pair continues to set its sights on the 100-day Simple Moving Average (SMA) at 1.2660.

Momentum indicators suggest a temporary cooling-off period rather than a structural shift. The Relative Strength Index (RSI) has dipped to 62, signaling a slowdown in buying pressure but still holding in positive territory. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat with green bars, reinforcing the notion that the latest price action is more of a technical correction than a bearish reversal.

Looking ahead, GBP/USD could receive fresh volatility on Wednesday as the UK is set to release key economic data, including inflation figures and retail sales numbers. These reports will be crucial in shaping expectations for Bank of England policy and could provide the fundamental push needed for the pair to either resume its upward trajectory or extend its consolidation phase.

GBP/USD daily chart

• GBP/USD falls 0.19% as DXY reclaims 107.00 amid Fed hawkishness.
• UK adds 107K jobs, wage growth jumps 5.9%, but fails to lift Sterling.
• Markets await UK inflation, US housing data, and FOMC minutes for direction.

The Pond Sterling retreated after rallying three consecutive days, dropping some 0.19% even though the UK’s jobs data was solid. Meanwhile, a hawkish tilt by Fed officials and US President Donald Trump's tariffs policies add to uncertainty, underpinning the Greenback. The GBP/USD trades at 1.2602.

Pound retreats despite upbear UK jobs data; traders await inflation data

In the UK, the economy added 107K people to the workforce, exceeding estimates of 50 K. Consequently, the Unemployment Rate in the fourth quarter stood steady at 4.4%, while pay growth, as revealed by Average weekly earnings before bonuses, jumped 5.9%.

Meanwhile, Fed Governor Christopher Waller crossed the wires on Monday, saying that Trump’s tariffs would have a modest impact on prices. His colleague Philadelphia Fed Patrick Harker said he doesn’t see a reason for an imminent change in interest-rate policy.

Harker’s view is closer to the hawkish comments revealed by Fed Chair Jerome Powell's semi-annual testimony to the US Congress, in which he reiterated that the Central Bank is in no rush to ease policy.

Traders currently see a 25-basis-point rate cut by July, though the odds for a December cut are at 80%, revealed Prime Market Terminal data.

Source: Prime Market Terminal

In the meantime, the GBP/USD extended its losses as the US Dollar Index (DXY) gains 0.26% and reclaims the 107.00 mark.

Ahead of the day, Fed officials will continue to grab the headlines, though traders are awaiting the UK’s inflation data on February 19, US housing data, and the latest Federal Open Market Committee (FOMC) minutes.

GBP/USD Price Forecast: Technical outlook

The GBP/USD is forming a ‘bearish harami’ two-candle chart pattern, which indicates that sellers could drive the exchange rate lower, setting t

heir sights below 1.2600. The Relative Strength Index (RSI) is bullish, though aiming slightly lower, indicating that the downside risks remain.

If GBP/USD tumbles below the February 17 low of 1.2577, look for a test of the February 5 high turned support at 1.2549, followed by the 50-day Simple Moving Average (SMA) at 1.2467. On the other hand, buyers need to drive the exchange rate past 1.2634 so they can challenge the 100-day SMA at 1.2678.

Scope for Pound Sterling (GBP) to edge higher vs US Dollar (USD), but any advance is likely part of a higher trading range of 1.2580/1.2655. Further GBP strength appears likely; the focus is at 1.2655, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Further GBP strength appears likely

24-HOUR VIEW: "After GBP rose to 1.2631 last Friday and then pulled back, we indicated yesterday that 'the pullback in overbought conditions suggests that GBP is unlikely to rise much further.' We expected GBP to 'trade in a range between 1.2540 and 1.2620.' However, GBP edged to a high of 1.2635 before closing at 1.2626 (+0.33%). While there is scope for GBP to continue to edge higher, any advance is likely part of a higher trading range of 1.2580/1.2655. In other words, GBP is unlikely to break clearly above 1.2655."

1-3 WEEKS VIEW: "There is not much to add to our update from yesterday (17 Feb, spot at 1.2580). As highlighted, 'further GBP strength appears likely, and the focus now is at 1.2655.' On the downside, a breach of 1.2525 (‘strong support’ level was at 1.2480 yesterday) would suggest that GBP is not strengthening further."

• GBP/USD declines ahead of UK labor data set to be released on Tuesday.
• UK PM Starmer said that any peace agreement for Ukraine would need a "US backstop" to deter further Russian attacks.
• Fed Governor Michelle Bowman warned that upside inflation risks persist, stressing the need for more clarity before considering rate cuts.

GBP/USD breaks its five-day winning streak, trading around 1.2600 during Tuesday's Asian session. Traders are awaiting UK employment data set to be released later in the day. The Claimant Count Change for January is expected to rise to 10K new unemployment benefit claimants, up from the previous 0.7K. The ILO Unemployment Rate is also forecast to increase to 4.5% from 4.4%.

British Prime Minister Keir Starmer stated on Monday that any peace deal for Ukraine would require a "US backstop" to prevent Russia from attacking again, according to Reuters. Starmer emphasized that Ukraine's future is a crucial issue for Europe, and it is urgent for Europe to share the responsibility in addressing the situation.

The downside risk for the GBP/USD pair could be linked to the strengthening US Dollar as Treasury yields rise. The US Dollar Index (DXY), which tracks the USD against six major currencies, edges higher after losing ground in the previous three sessions, trading around 106.90. At the same time, 2-year and 10-year US Treasury yields stand at 4.27% and 4.51%, respectively.

Federal Reserve Governor Michelle Bowman remarked on Monday that rising asset prices may have slowed the Fed's progress on inflation. While she expects inflation to decline, she warned that upside risks persist and stressed the need for more certainty before considering rate cuts.

Meanwhile, Fed Governor Christopher Waller acknowledged on Monday that while inflation has improved, progress has been “excruciatingly” slow. Waller emphasized the importance of not letting policy uncertainty hinder data-driven decisions.

• GBP/USD rose another 0.3% on Monday, chalking in a fifth straight gain.
• Global markets traded on a sedate note with US market dark for a holiday.
• Key UK wages and labor data in the barrel for Tuesday.

GBP/USD traded its way into an easy fifth straight gain on Monday, climbing nearly one-third of one percent and crossing back over the 1.2600 handle. Money market flows were constrained to kick off the new trading week with US market dark for the President’s Day holiday.

UK Average Earnings for the three months ended in December are expected to tick higher on an annualized basis on Tuesday. The headline figure for both with and without bonuses factored in is expected to print at 5.9%, compared to the previous print of 5.6%. The UK Claimant Count Change for January is also projected to swing higher to 10K net new unemployment benefits seekers over the month, compared to the previous 0.7K print. The ILO Unemployment Rate is also expected to rise to 4.5% from 4.4%.

The key US data print this week will be the upcoming Meeting Minutes from the Federal Reserve’s (Fed) latest rate call, due on Wednesday. US Purchasing Managers Index (PMI) survey results are also due this week, but not until Friday.

GBP/USD price forecast

GBP/USD staged another intraday gain on Monday, closing north of the 1.2600 handle for the first time mid-December. The pair is grinding its way steadily higher, but price action still remains capped just south of the 200-day Exponential Moving Average (EMA) near 1.2660.

Cable bidders have pushed the pair up from its last swing low into 1.2100 in January, and the current bull run has added 4.4% to GBP/USD. However, bullish sentiment is proving to be a fickle beast, and the latest upswing is still fresh out of a noisy congestion period that kept Cable bids battling around the 1.2400 handle.

GBP/USD daily chart

• GBP/USD maintains last week’s gains after upbeat UK GDP data.
• BoE’s Catherine Mann signals dovish shift, weighing on sentiment.
• Traders eye UK jobs, inflation data; Fed speakers and FOMC minutes ahead.

The Pound Sterling registered modest gains versus the US Dollar on Monday in thin liquidity trade due to the observance of US President's Day. At the time of writing, the GBP/USD exchanged hands shy of 1.2600, up 0.05%.

Sterling steadies, but dovish BoE tilt may cap upside

Cable maintained its profits from last week, following better-than-expected Gross Domestic Product (GDP) figures for the last quarter of 2024. However, a dovish tilt by Bank of England (BoE) member Catherine Mann could weigh on the GBP/USD pair and push it lower.

Recently, BoE Governor Andrew Bailey reiterated that inflation is slowing and added that an expected increase in prices would be short-lived. Traders are eyeing the release of UK labor market data on February 18, followed by inflation figures, with the Consumer Price Index (CPI) expected to rise from 2.5% to 2.8%.

Aside from this, Philadelphia Fed Patrick Harker said the status of the economy warrants a steady rate policy for now, with monetary policy in a good place right now. He added that inflation is elevated and has been sticky for recent months and that the Fed policy stance should continue to lower inflation.

The US economic docket will feature further Fed speakers, housing data, the latest FOMC meeting minutes, Initial Jobless Claims, and S&P Global Flash PMIs.

GBP/USD Price Forecast: Technical outlook

Given the fundamental backdrop, the GBP/USD surges, as momentum favors further upside as the Relative Strength Index (RSI) remains bullish. Nevertheless, the pair remains below last Friday’s peak of 1.2629, with buyers unable to crack the latter and if sellers drive the exchange rate below 1.2600, further downside lies ahead.

Key support levels would be the February 5 high turned support at 1.2549, followed by the 50-day Simple Moving Average (SMA) at 1.2468. Conversely, if GBP/USD clears the February 14 high of 1.2629, the pair could aim to the 100-day SMA at 1.2686, ahead of the 200-day SMA at 1.2786.

The Pound Sterling (GBP) is likely to trade in a range between 1.2540 and 1.2620 vs the US Dollar (USD). In the longer run, further GBP strength appears likely; the focus is at 1.2655, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Further GBP strength appears likely

24-HOUR VIEW: "GBP soared and closed higher by 0.99% at 1.2569 last Thursday. On Friday, we highlighted that 'while there appears to be enough momentum for GBP to rise further today, deeply overbought conditions suggest any advance is likely part of a higher 1.2480/1.2600 range.' However, GBP rose more than expected to 1.2631, pulling back to close at 1.2585 (+0.13%). The pullback in overbought conditions suggests that GBP is unlikely to rise much further. Today, it is more likely to trade in a range, probably between 1.2540 and 1.2620."

1-3 WEEKS VIEW: "We highlighted last Friday (14 Feb, spot at 1.2560) that 'the sharp increase in momentum is likely to lead to further GBP strength.' We pointed out that 'the levels to watch are 1.2600 and 1.2655.' We did not quite expect GBP to breach 1.2600 so soon as it rose to 1.2631. Further GBP strength appears likely, and the focus now is at 1.2655. On the downside, should GBP breach 1.2480 (‘strong support’ level was at 1.2450 last Friday), it would mean the current upward momentum has faded."

• GBP/USD posts modest gains around 1.2585 in Monday’s early Asian session. 
• The US Retail Sales dropped 0.9% in January, weaker than expected.
• Investors brace for the UK labor market data and CPI inflation data, which are due later this week. 

The GBP/USD pair trades with mild gains near 1.2585 during the early Asian session on Monday. The major pair edges higher amid the upbeat UK Gross Domestic Product (GDP) report and weaker US Retail Sales data. The US market will be closed on Monday in observance of President's Day. 

US Retail Sales posted the biggest drop in nearly two years, dragging the Greenback lower. Retail Sales dropped 0.9% in January after an upwardly revised 0.7% increase in December, the Commerce Department's Census Bureau reported Friday. This figure came in weaker than the estimation of a 0.1% decline. On a yearly basis, Retail Sales increased 4.2% during the same reported period. 

The better-than-expected UK GDP provides some support to the Pound Sterling (GBP). The UK economy grew by 0.1% QoQ in the fourth quarter (Q4) of 2024, beating expectations, according to a preliminary estimate from the UK Office for National Statistics (ONS) on Thursday.

Traders will keep an eye on the UK labor market data and Consumer Price Index (CPI) inflation data, which will be published on Tuesday and Wednesday, respectively. These reports could offer some hints as to whether the Bank of England (BoE) will cut its interest rates again in the March meeting.

• GBP/USD posts modest gains around 1.2585 in Monday’s early Asian session. 
• The US Retail Sales dropped 0.9% in January, weaker than expected.
• Investors brace for the UK labor market data and CPI inflation data, which are due later this week. 

The GBP/USD pair trades with mild gains near 1.2585 during the early Asian session on Monday. The major pair edges higher amid the upbeat UK Gross Domestic Product (GDP) report and weaker US Retail Sales data. The US market will be closed on Monday in observance of President's Day. 

US Retail Sales posted the biggest drop in nearly two years, dragging the Greenback lower. Retail Sales dropped 0.9% in January after an upwardly revised 0.7% increase in December, the Commerce Department's Census Bureau reported Friday. This figure came in weaker than the estimation of a 0.1% decline. On a yearly basis, Retail Sales increased 4.2% during the same reported period. 

The better-than-expected UK GDP provides some support to the Pound Sterling (GBP). The UK economy grew by 0.1% QoQ in the fourth quarter (Q4) of 2024, beating expectations, according to a preliminary estimate from the UK Office for National Statistics (ONS) on Thursday.

Traders will keep an eye on the UK labor market data and Consumer Price Index (CPI) inflation data, which will be published on Tuesday and Wednesday, respectively. These reports could offer some hints as to whether the Bank of England (BoE) will cut its interest rates again in the March meeting.

• US Retail Sales plunge 0.9% in January, missing forecasts.
• UK GDP surprises to the upside, boosting Pound momentum.
• GBP/USD eyes 100-day SMA at 1.2694 despite Fed-BoE policy divergence.

The Pound Sterling rallied for the second consecutive day on Friday, reclaiming the 1.2600 figure following a dismal US Retail Sales report that reflected American consumers cut their expenses. The GBP/USD trades at 1.2626, up over 0.50%.

Sterling climbs past 1.2600 as UK data outperforms expectations

The financial markets narrative revolved around US President Donald Trump's tariffs, with the Greenback treading water. US Retail Sales data disappointed investors after contracting over -0.9% MoM in January, missing estimates of -0.1% and December figures upwardly revised by 0.7%.

Other data revealed that Industrial Production expanded in January, over 0.5% MoM down from December’s 1% but exceeded economists’ projections of 0.3%

Today’s data and better-than-expected Gross Domestic Product (GDP) figures in the UK keep the GBP/USD tilted to the upside. Buyers are eyeing a test of the 100-day Simple Moving Average (SMA) at 1.2694.

This is despite the divergence in monetary policy between the Federal Reserve and the Bank of England (BoE). The former is expected to keep policy in check, with 35 basis points of easing priced in by traders for the year’s end. Meanwhile, the BoE reduced borrowing costs last week, with two members voting for a 50-basis point cut.

Next week, the economic docket in the UK will feature BoE’s Baily, jobs data, the latest inflation report, and Retail Sales. On the US, the Fed parade will continue, the release of the latest FOMC meeting minutes, housing data, and S&P Flash PMIs.

GBP/USD Price Forecast: Technical outlook

The GBP/USD shifted neutral after witnessing a fall of close to 10% since September 26, 2024. However, buyers stepped in and pushed the pair above the 50-day Simple Moving Average (SMA) of 1.2472, taking advantage of a weaker US Dollar.

The Relative Strength Index (RSI) reveals that momentum shifted in favor of buyers; henceforth, further upside is seen. If GBP/USD climbs past the 100-day SMA, the next resistance would be 1.2700, followed by the 200-day SMA at 1.2786.

Conversely, if GBP/USD drops below the February 5 daily high at 1.2549, the next support would be the 50-day SMA at 1.2472.

There appears to be enough momentum for Pound Sterling (GBP) vs US Dollar (USD) to rise further, but any advance is likely part of a higher 1.2480/1.2600 range. In the longer run, sharp increase in momentum is likely to lead to further GBP strength; the levels to watch are 1.2600 and 1.2655, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Increase in momentum is likely to lead to further GBP strength

24-HOUR VIEW: "Following Wednesday’s price movements, we noted yesterday (Thursday) that 'there has been no increase in either downward or upward momentum.' We expected GBP to 'trade in a range between 1.2390 and 1.2490.' Instead of trading in a range, GBP surged and closed on a strong note at 1.2569 (+0.99%). While there appears to be enough momentum for GBP to rise further today, deeply overbought conditions suggest any advance is likely part of a higher 1.2480/1.2600 range. In other words, GBP is unlikely to break clearly above 1.2600. The major resistance at 1.2655 is also unlikely to come into view."

1-3 WEEKS VIEW: "One week ago (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.' After trading in a range for several days, GBP surged and broke above 1.2550 yesterday, reaching a high of 1.2569. There has been a sharp increase in momentum, and we expect GBP to strengthen further. The levels to watch are 1.2600 and 1.2655. To sustain the momentum, GBP must remain above the ‘strong support’ level, currently at 1.2450."

• GBP/USD advanced as US Dollar weakened amid lower US yields.
• US Core PPI inflation rose to 3.6% YoY in January, exceeding the expected 3.3% but slightly below the revised 3.7%.
• The UK GDP expanded by 1.4% year-on-year in Q4 2024, surpassing market expectations of 1.1%.

GBP/USD remains steady around 1.2560 during the Asian hours on Friday following gains in the previous session. The pair appreciated as US President Donald Trump delayed the implementation of reciprocal tariffs. Additionally, the US Dollar (USD) weakens amid falling US yields across the curve, despite ongoing concerns about a global trade war.

The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, extends its losses for the fourth successive session. The DXY trades around 107.00 with 2-year and 10-year yields on US Treasury bonds standing at 4.31% and 4.53%, respectively, at the time of writing.

Core PPI inflation in the United States (US) rose to 3.6% YoY in January, exceeding the expected 3.3% but slightly below the revised 3.7% (previously reported as 3.5%). This has reinforced expectations that the Federal Reserve (Fed) will delay rate cuts until the second half of the year. Additionally, persistently strong inflation could further support the outlook for the Fed to keep interest rates at 4.25%-4.50% for an extended period.

Investors now turn their attention to the upcoming US Retail Sales data, the final major economic release of the week. Markets anticipate a slight contraction of -0.1% in monthly Retail Sales, following the previous 0.4% increase.

In the United Kingdom (UK), the data showed on Thursday that the economy grew by 1.4% year-on-year in Q4 2024, accelerating from an upwardly revised 1.0% in the previous quarter and exceeding market expectations of 1.1%, according to preliminary estimates. This marks the fastest GDP growth since Q4 2022. For the full year 2024, the British economy expanded by 0.9%, up from 0.4% in 2023, driven by a 1.3% increase in the services sector, compared to 0.4% growth the previous year.

• GBP/USD rose nearly a full percent on Thursday.
• UK GDP came in firmer than expected, and US PPI figures firmed post-revision.
• US Retail Sales still in the pipe for Friday, but tariff threats have again eased.

GBP/USD rallied on Thursday, climbing over nine-tenths of one percent and tapping the 1.2560 region after economic data came in broadly better-than-expected on both sides of the Atlantic. UK Gross Domestic Product (GDP) beat median market forecasts, and US Producer Price Index (PPI) inflation figures assuaged investor concerns after an uptick in consumer-level inflation this week.

US President Donald Trump: Plan for reciprocal tariffs in the works

US President Donald Trump made a big reveal of his latest idea for drumming up tax revenues in the face of steep administrative tax cuts. “Reciprocal tariffs”, plans to levy fees against countries who have tariffs on US goods, are set to take shape over the coming months, with US Commerce Secretary Howard Lutnick tapped to work out the details.

The timeline on further tariff threats remains elusive, and investors are pricing the fresh tariff threats in as something that is not going to happen, much like President Trump’s “day one tariffs”, and tariffs on Canada and Mexico, and specific tariffs on automobiles, microchips, and pharmaceuticals. Taken in totality, there are a lot of concepts of a plan to impose stiff import taxes on US consumers and businesses, but very little real progress, and investors are betting that the trend will continue.

Forex Today: Markets now look at tariffs and US fundamentals

UK Q4 GDP clocked in at 1.4% YoY, well above the forecast 1.1%, and rising even further from the previous period’s revised 1.0%. QoQ GDP also beat the street, rising to 0.1% versus the forecast -0.1% contraction.

On the US side, PPI business-level inflation came in above expectations, but sharp revisions to previous figures gave investors the opportunity to interpret the latest batch of price data as showing easing inflation pressures. Core PPI inflation for the year ended in January came in at 3.6% YoY, well above the forecast 3.3% but a tick below the revised figure of 3.7%, which initially printed at 3.5%.

US Retail Sales are all that remains in the barrel for the remainder of the week’s key data. Markets will be hoping for another firm print, with the monthly Retail Sales figure forecast to come in at a slight contraction of -0.1% compared to the previous 0.4%.

GBP/USD price forecast

After weeks of bullish effort, GBP/USD is finally back above the 50-day Exponential Moving Average (EMA) near the 1.2500 handle. There is still plenty of room to the downside that bulls can fall after several weeks of congestion, but the next immediate technical barrier to the upside sits at the 200-day EMA parked just below 1.2700.

GBP/USD daily chart

• UK GDP surprises with 0.1% growth, defying recession fears.
• US PPI inflation exceeds expectations, reinforcing Fed’s cautious stance on rate cuts.
• GBP/USD holds gains, but technical outlook still favors downside below 1.2473.

The Pound Sterling registered solid gains versus the Greenback on Thursday after GDP figures in the UK surprisingly beat estimates. Meanwhile, inflation in the US rose, and US job data shows that the labor market remains strong. The GBP/USD trades at 1.2510, up 0.53%.

Sterling gains but BoE’s and Fed divergence caps upside potential

Data saved the British Pound after the Q4 2024 preliminary reading showed the economy grew 0.1% QoQ, exceeding estimates for a -0.1 % contraction. On a yearly basis, GDP increased by 1.5%, which is above forecasts and the previous reading of 1%.

In the US, the US Bureau of Labor Statistics (BLS) revealed that the Producer Price Index (PPI) came at 0.4% MoM in January, above estimates of 0.3%, down from 0.5%. In year-over-year (YoY) data, the PPI remained unchanged at 3.5% but exceeded forecasts.

Core figures also came slightly hot, with monthly figures rising 0.3% as estimated. In the twelve months to January, the Core PPI increased by 3.6%, three-tenths above the 3.3% projection.

Other data showed that Initial Jobless Claims for the week ending February 8 rose by 213K, below estimates of 215K, and the February 1 reading of 220K.

Given the backdrop, the GBP/USD is trading in the green, though divergence amongst central banks favors further downside. After UK’s GDP data, markets fully priced in the next cut in June and expect 55 basis points of easing by the Bank of England (BoE) towards the end of 2025.

Nevertheless, the BoE’s Chief Economist Hue Pill said that he expects further rate cuts but urges caution as the disinflation process is not complete.

Meanwhile, the Fed adopted a cautious stance after the latest readings of inflation indicated the disinflation process stalled after five straight months of price increases. On Wednesday, the Fed Chair Jerome Powell said, “We are close but not there on inflation,” adding, “We want to keep policy restrictive for now.”

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend remains intact as depicted by the daily chart. But if buyers reclaim the February 5 high of 1.2549, the bias shifts to neutral as the pair had achieved a higher-high, an indication of a trend shift. Further upside lies at 1.2600, and buyers may challenge the 100-day Simple Moving Average (SMA) at 1.2700.

Conversely, if GBP/USD drops below the 50-day SMA at 1.2473, sellers could push prices toward the 1.2400 mark.

Pound Sterling (GBP) is expected to trade in a range between 1.2390 and 1.2490. 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.

No increase in either downward or upward momentum

24-HOUR VIEW: "We highlighted yesterday that while GBP is likely to continue to rise, any further advance is expected to face strong resistance at 1.2500.' However, GBP swung between 1.2377 and 1.2483 before closing unchanged at 1.2445. There has been no increase in either downward or upward momentum. Today, we expect GBP to trade in a range between 1.2390 and 1.2490."

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 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