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

The Pound Sterling (GBP) is expected to consolidate in a 1.2460/1.2540 range. In the longer run, GBP has to break and remain above 1.2550 before a sustained advance can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

While above 1.2370, GBP can still test 1.2550

24-HOUR VIEW: “When GBP was at 1.2480 yesterday, we indicated that it ‘could rise further, but given the overbought conditions, a sustained break above 1.2530 appears unlikely.’ We also pointed out that ‘support levels are at 1.2450 and 1.2420.” GBP subsequently dipped to 1.2465, rose to 1.2550, closing at 1.2506 (+0.20%). The price action did not result in any further increase in momentum. This, combined with overbought conditions, is likely to lead to consolidation. Expected range for today: 1.2460/1.2540.”

1-3 WEEKS VIEW: “Our latest narrative was from two days ago (04 Feb, spot at 1.2430), wherein ‘for the time being, we expect GBP to trade in a range of 1.2245/1.2530.’ Yesterday, GBP rose above 1.2530, reaching a high of 1.2550. Upward momentum is increasing, but not enough to suggest a sustained advance. For a sustained advance, GBP has to break and remain above 1.2550. The probability of GBP breaking clearly above 1.2550 will remain intact as long as 1.2370 (‘strong support’ level) is not breached.”

• GBP/USD moves little as traders adopt caution ahead of the BoE’s interest rate decision on Thursday.
• The BoE is widely anticipated to deliver a 25 basis point rate cut in February.
• The US ISM Services PMI eased to 52.8 in January from 54.0 in December.

GBP/USD halts its three-day winning streak, trading around 1.2490 during the Asian hours on Thursday. The Pound Sterling (GBP) could face downward pressure amid expectations that the Bank of England (BoE) will resume its policy-easing cycle, likely lowering interest rates by 25 basis points (bps) to 4.5% later in the day.

The BoE’s Monetary Policy Committee (MPC) is anticipated to vote 8-1 in favor of a quarter-point rate cut to 4.5%, with one member possibly suggesting that rates should be left unchanged for another meeting.

The GBP/USD pair inches lower as the US Dollar Index (DXY), which measures the US Dollar’s (USD) value against six major currencies, holds ground following its three-day losing streak. The DXY trades around 107.60 at the time of writing.

On Thursday, Federal Reserve Vice Chair Philip Jefferson expressed his satisfaction with keeping the Fed Funds rate at its current level, stating that he would assess the overall impact of Trump's policies before making further decisions. He also emphasized that the Fed's rate remains restrictive for the economy, even with a 100-basis-point decline.

On Wednesday, the weaker US Services Purchasing Manager Index (PMI) weighed on the Greenback. The US ISM Services PMI eased to 52.8 in January from 54.0 (revised from 54.1) in December. This reading came in below the market consensus of 54.3. Traders brace for Friday’s US Nonfarm Payrolls (NFP) data, which is expected to shape the Federal Reserve’s (Fed) monetary policy direction.

• GBP/USD explored the high side on Wednesday but with little momentum.
• The pair remains constrained by key technical averages.
• BoE rate call due on Thursday, US NFP slated for Friday.

GBP/USD found some bidding action amid a broad-market easing in the Greenback. Market sentiment is drifting into the high end as investors recover from the early week’s trade war fears, and Cable traders are buckling down for the wait to the Bank of England’s (BoE) latest rate call.

US ADP Employment Change figures came in stronger than expected in January, showing a net increase of 183K in payrolls, beating the expected fall to 150K from December’s revised print of 176K. ADP job figures are a shaky forecast of US Nonfarm Payrolls (NFP) due at the end of the week, but the upswing is adding to investor confidence that the US economy remains on firm footing.

The BoE is widely expected to cut interest rates by 25 bps on Thursday. Median market forecasts expect the BoE’s Monetary Policy Committee (MPC) to vote eight-to-one to reduce interest rates to 4.5% from 4.75%, with the lone holdout expected to vote to keep interest rates steady for another meeting.

The key data print this week will be US NFP jobs additions on Friday. Investors expect January’s NFP print to ease to 170K from December’s print of 256K. Traders will also be keeping a close eye on revisions to previous months. Market participants hoping for rate cuts have been increasingly frustrated by the latent strength of the US economy, with labor figures routinely getting revised higher after the fact.

GBP/USD price forecast

Cable sprung higher on Wednesday, tapping a fresh three-week high of 1.2550, but price action was squeezed back to the middle. GBP/USD is getting hung up on the 50-day Exponential Moving Average (EMA) near the 1.2500 handle.

GBP/USD daily chart

• GBP/USD rises maintaining position above the 50-day SMA as market digests US tariff negotiations.
• US labor market shows strength with ADP employment figures surpassing expectations, spotlight on Nonfarm Payrolls.
• UK economic indicators show slight downturn, with market eyes on BoE's anticipated rate cut.

The Pound Sterling remains bid for the third consecutive day, edges up 0.34% as the GBP/USD trades at 1.2519 above the 50-day Simple Moving Average (SMA) at 1.2501.

GBP/USD ascends modestly, bolstered by positive market sentiment

The Greenback has erased most of its Monday’s gains, spurred by the US imposing tariffs on Mexico and Canada. However, both countries reached agreements with Washington. Therefore, investors who once seemed uncertain about US trade policies are confident that US President Donald Trump is using tariffs as a “tool” to negotiate with allies and adversaries.

Data has taken a backseat, with traders eyeing the release of US Nonfarm Payroll figures for January. Wednesday’s US docket featured ADP National Employment Change for January. The numbers exceeded estimates of 150K and rose by 183K, an indication of strength in the labor market.

At the same time, business activity continued to deteriorate. S&P Global featured Services PMI for January, which dipped from 56.8 to 52.9, better than the 52.8 expected. Up next, the Institute for Supply Management (ISM) will feature the Non-Manufacturing PMI, foreseen to increase from 54.1 to 54.3.

Across the pond, January's UK S&P Global Services PMI dipped from 51.1 to 50.8 as economic conditions worsened. Traders await the Bank of England’s (BoE) monetary policy decision on Thursday, poised to reduce rates by 25 basis points (bps) from 4.75% to 4.50%, according to Prime Market Terminal data.

Source: Prime Market Terminal

GBP/USD Price Forecast: Technical outlook

The GBP/USD cleared the January 27 peak of 1.2523, a strong resistance level, and reached a new four-week peak at 1.2549. Although bullish, a daily close above the former would open the door to challenge the year-to-date (YTD) high of 1.2575 and the 1.2600 figure.

If there is a failure to clear 1.2550, sellers could be set to push GBP/USD lower, with trades eyeing 1.2400. Further downside lies underneath the January 2 low of 1.2351, followed by the February 3 low of 1.2248.

The Pound Sterling (GBP) could rise further; overbought conditions suggest a sustained break above 1.2530 is unlikely. In the longer run, for the time being, GBP is expected to trade in a range of 1.2245/1.2530, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is expected to trade in a range of 1.2245/1.2530

24-HOUR VIEW: "While we indicated yesterday that “the rapid rise in GBP has scope to extend,” we highlighted that “any advance is unlikely to break clearly above 1.2475.” We added, “the major resistance at 1.2530 is not expected to come under threat.” Our view of GBP advancing was not wrong, even though it rose more than expected to 1.2492. Today, GBP could rise further, but given the overbought conditions, a sustained break above 1.2530 appears unlikely. Support levels are at 1.2450 and 1.2420."

1-3 WEEKS VIEW: "We highlighted yesterday (04 Feb, spot at 1.2430) that “for the time being, we expect GBP to trade in a range of 1.2245/1.2530.” GBP subsequently rose to 1.2492, and while momentum is beginning to build, it is not sufficient to suggest a sustained advance. In other words, our view remains unchanged for now."

• GBP/USD consolidates near the top end of its weekly trading range. 
• Traders seem reluctant ahead of the key BoE meeting on Thursday.
• The USD hangs near the weekly low and lends support to the major.

The GBP/USD pair struggles to capitalize on its strong gains registered over the past two days and consolidates near a one-week top, below the 1.2500 psychological mark during the Asian session on Wednesday. The downside, however, remains cushioned amid some follow-through US Dollar (USD) selling. 

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, hangs near the weekly low amid the prospects for further policy easing by the Federal Reserve (Fed). The bets were reaffirmed by the Job Openings and Labor Turnover Survey (JOLTS) released on Tuesday, which pointed to a slowdown in the US labor market and should allow the Fed to lower borrowing costs further despite stick inflation. 

Meanwhile, the global risk sentiment remains supported by the optimism led by US President Donald Trump's decision to delay tariffs on Canadian and Mexican imports, which helped ease concerns about a trade war and its impact on the global economy. This is evident from a generally positive tone around the equity markets, which is seen as another factor undermining the safe-haven buck and acting as a tailwind for the GBP/USD pair. 

Investors, however, remain concerned about the potential fallout from trade tensions between the US and China – the world's top two economies. This, along with the Fed's hawkish outlook, helps limit the downside for the USD and caps the upside for the GBP/USD pair. Traders also seem reluctant and might opt to move to the sidelines ahead of the key central bank event risk – the Bank of England (BoE) policy meeting on Thursday.

• GBP/USD climbed 0.6% on Tuesday as tariff threats ease.
• President Trump’s trade war threats are fading into the background.
• Data remains mid-tier until BoE’s rate call on Thursday and Friday’s US NFP.

GBP/USD continued to grind higher on Tuesday, extending a recovery after the week’s early plunge on trade war concerns sparked by US President Donald Trump’s sweeping threats to impose stiff tariffs on his own constituents in an effort to punish some of the US’ closest trade allies. Tariffs, which were supposed to go into effect on Tuesday, have been kicked down the road another 30 days, marking President Trump’s third consecutive walk back of his own threats as he secures concessions that were largely already given to the previous administration. 

The midweek session will be a thin affair on the economic data docket with geopolitical headlines fading into background noise as investors tune out President Trump’s long-winded diatribe of perceived grievances. Even if his tariff talk had a chance of materializing, the UK is unlikely to draw any specific trade ire from Donald Trump.

US ADP Employment Change figures are due on Wednesday, but the janky figure is unlikely to spark much momentum. US ISM Services Purchasing Managers Index (PMI) activity survey results for January are also expected, but the figure is forecast to shift to 54.3 from 54.1. The key US print this week will be Friday’s Nonfarm Payrolls, slated to ease to 170K from 256K.

The Bank of England’s (BoE) upcoming rate call on Thursday is broadly expected to deliver a quarter point cut to markets. With the US Federal Reserve (Fed) firmly embedded in a wait-and-see stance over inconsistent US policy, Cable’s interest rate differential is set to widen slightly this week, capping bullish potential.

GBP/USD price forecast

GBP/USD climbed a little over six-tenths of one percent, clawing back to 1.2480, but the pair still remains capped below the 1.2500 handle as the 50-day Exponential Moving Average (EMA) weighs on near-term price action.

A successful break to the upside could send Cable bids back into the 200-day EMA at 1.2700, but a return to recent lows near 1.2100 is also on the cards as price action wastes a bullish turnaround in the Moving Average Convergence-Divergence (MACD) oscillator.

GBP/USD daily chart

• GBP/USD gains for a second consecutive day, influenced by halted US tariffs on Mexico and Canada.
• Technical stance remains bearish unless GBP/USD surpasses 1.2503 SMA and 1.2576 resistance.
• Sellers need to breach 1.2436 to reignite bearish momentum, potentially targeting lower supports.

The Pound Sterling (GBP) post gains versus the US Dollar (USD) for the second straight day after US President Donald Trump tariff threats on Mexico and Canada were delayed, due to negotiations beginning between the parties, aimed to improve fighting against fentanyl traffic and illegal migration. The GBP/USD trades at 1.2476 up 0.62%.

GBPUSD Price Forecast: Technical outlook

Despite extending its gains, the GBP/USD remains biased downward, unless buyers lift the pair above the 50-day Simple Moving Average (SMA) of 1.2503 and above the January 7 peak of 1.2576. Once that happens, the market would be in equilibrium, but with momentum skewed to the upside.

The Relative Strength Index (RSI) suggests that buyers are gathering momentum in the short term.

For a bearish continuation, the GBP/USD must drop below February 3 high of 1.2436, which would pave the way for challenging 1.2400. On further weakness the next support would be April 22, 2024 swing low of 1.2299.

GBPUSD Price Chart – Daily

Rapid rise has scope to extend, but any advance is unlikely to break clearly above 1.2475. In the longer run, for the time being, GBP is expected to trade in a range of 1.2245/1.2530, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

GBP is expected to trade in a range of 1.2245/1.2530

24-HOUR VIEW: “Yesterday, when GBP was at 1.2310, we indicated that ‘while the sharp drop in GBP today has scope to extend, we expect the 1.2245 level to provide support.’ GBP subsequently dropped to 1.2249 and then reversed sharply, soaring to a high of 1.2455. This time around, the rapid rise has scope to extend, but any advance is unlikely to break clearly above 1.2475. The major resistance at 1.2530 is not expected to come under threat. On the downside, support levels are at 1.2380 and 1.2330.”

1-3 WEEKS VIEW: “We noted early yesterday (03 Feb, spot at 1.2310) that ‘despite dropping sharply upon opening today, there has been no significant increase in downward momentum.’ However, we were of the view that GBP ‘is likely to trade with a downward bias towards 1.2245.’ GBP subsequently dropped to within a few pips of 1.2245 (low of 1.2249) and then in a sudden move, surged above our ‘strong resistance’ level of 1.2435 (high of 1.2455). Downward momentum has fizzled out, and for the time being, we expect GBP to trade in a range of 1.2245/1.2530.”

• GBP/USD could lose ground as China is set to be hit with a 10% across-the-board tariff on Tuesday.
• Trump said on Monday afternoon that talks with China would take place probably over the next 24 hours.
• Traders expect the BoE to deliver a 25 basis point rate cut on Thursday amid signs of slowing inflation in the UK.

GBP/USD continues to gain ground for the second successive session, trading around 1.2430 during the Asian hours on Tuesday. The pair improved amid improved risk-on sentiment after US President Donald Trump announced late Monday that he would pause tariffs on Mexico and Canada.

However, market volatility remains a concern, with investors closely monitoring developments in ongoing tariff negotiations. President Trump stated that he would suspend steep tariffs on Mexico and Canada after their leaders agreed to deploy 10,000 soldiers to the US border to combat drug trafficking. The tariffs on Mexico and Canada have been postponed for at least 30 days.

The decision to postpone tariffs comes just two days after Trump imposed 25% tariffs on Mexican and Canadian goods and 10% tariffs on imports from China. China is set to be hit with an across-the-board tariff starting at 05:00 GMT on Tuesday. However, Trump said on Monday afternoon that talks with China would take place “probably over the next 24 hours.” He also said, “If we can’t make a deal with China, then the tariffs will be very, very substantial.”

The US Dollar Index (DXY), which measures the US Dollar’s (USD)value against six major currencies, stabilizes around 108.70 at the time of writing after giving up most of its gains in the previous session. However, the upbeat US economic data could provide some support to the Greenback. ISM Manufacturing PMI rose to 50.9 in January from 49.3 in December. This reading came in better than the estimation of 49.8.

The upside of the GBP/USD pair could be restrained as the Pound Sterling (GBP) may face risks due to expectations that the Bank of England (BoE) will restart its policy-easing cycle, likely cutting interest rates by 25 basis points (bps) to 4.5% on Thursday.

Traders anticipate a dovish stance from the Bank of England amid signs of slowing inflation, despite accelerating wage growth in the United Kingdom (UK). The BoE’s Monetary Policy Committee (MPC) is expected to vote 8-1 in favor of a quarter-point rate cut to 4.5%, with one member likely advocating for maintaining current rates for another meeting.

• GBP/USD plunged after the weekend’s tariff threats.
• Significant concessions in US tariff scheme sees market sentiment recover.
• Broader markets brush off tariffs to recover risk appetite.

GBP/USD sewered after a batch of fresh tariff threats from US President Donald Trump hit the markets, but plunges across global risk markets clawed back to recover ground after looming US tariffs on Canada and Mexico gave way to 30-day concessions from the Trump administration. Odds of US tariffs on the UK specifically remain limited, and Cable managed to rebound to the 1.2450 region at the tail-end of the Monday trading session.

The Bank of England (BoE) is set to give another rate call later this week, and markets are broadly pricing in another rate cut. The BoE’s Monetary Policy Committee (MPC) is expected to vote eight-to-one on cutting interest rates another quarter-point to 4.5%, with the one holdout expected to vote for holding rates steady for another meeting.

Another US Nonfarm Payrolls (NFP) print looms ahead on Friday. Jobs figures are unlikely to move the needle too much this week. The US labor segment remains sturdy, and geopolitical headlines are taking the front seat this week.

GBP/USD price forecast

Despite a bullish recovery, GBP/USD remains caught on the wrong end of momentum. The early week’s price action cut a deep gouge in the pair, dragging bids into a two-week low below 1.2300.

Price action pared back intraday losses, but Cable still remains south of the 50-day Exponential Moving Average (EMA) at the 1.2500 handle. 

GBP/USD daily chart

• Tariff headlines grip global markets as US President Trump lashes out at global trade stability.
• A wide cut of US tariffs has sewered global market sentiment.
• A last-minute aversion of Mexico tariffs has bolstered investor hopes that a global trade war might not happen.

GBP/USD roiled on Monday, tumbling 1.5% during the overnight session before recovering back to flat for the day at the 1.2400 handle. Import tariffs from the US brewing into a large-scale global trade war hobbled market sentiment over the weekend.

The US was geared up to impose sweeping import tariffs of 25% on Canada and Mexico, as well as an additional 10% on China, with US President Donald Trump promising to add an additional 10% levy on goods imported from the EU. However, Mexico was able to obtain a one-month reprieve from the US' tariffs, leading investors to hope that the majority of global tariffs will able to be averted by countries acquiescing to whatever Trump demands in exchange for easing tariffs. Donald Trump specifically voiced a desire for "rare earth metals" agreements from Ukraine in exchange for the US' continued help with the Russian invasion, as well as re-floating taking control of the Panama Canal, which is currently owned and controlled by the country of Panama.

Trump specifically waved off the idea of tariffs on the UK, stating that it is likely that the two countries would be able to work something out, sparking a relief rally in the Pound Sterling that took Monday's bearish plunge back to flat. 

The Bank of England (BoE) is expected to cut interest rates later this week. However, things could change rapidly if it appears like tariffs are going to become an ongoing, globally-inflationary issue.

GBP/USD price forecast

GBP/USD continues to grind through a middle-ground technical stance, hung up on price action near the 1.2400 handle. However, continued tests into the low end and a general uptick in volatility this week will likely keep the Pound Sterling on the defensive as Cable continues to fall away from the 50-day Exponential Moving Average (EMA) near 1.2500.

GBP/USD daily chart

The Pound Sterling (GBP) is weaker on the session but it has held up a little better than its G10 peers, Scotiabank's Chief FX Strategist Shaun Osborne notes, Scotiabank's Chief FX Strategist Shaun Osborne notes.

GBP is trading weaker on the day

"The UK has yet to draw the tariff ire of President Trump. The US runs a small trade surplus with the UK overall and the UK’s trade advantage lies in services, rather than goods. That does not mean that tariffs in some form are not coming but the economic hit may be relatively less severe. Final January UK manufacturing PMI was revised up 0.1 to 48.3."

"Sterling has been less affected by the weekend volatility and intraday chart patterns are leaning mildly bullish in early trade as the pound edges off the early low. Cable gains have been capped at 1.2325 so far intraday but a push through the low 1.23s should see spot rebound to1.2375/00 at least. Support is 1.2250."

Sharp drop in GBP has scope to extend; the 1.2245 level is expected to provide support. In the longer run, GBP is likely to trade with a downward bias towards 1.2245, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

GBP is likely to trade with a downward bias

24-HOUR VIEW: “While the sharp drop in GBP today has scope to extend, we expect the 1.2245 level to provide support. The next support, at 1.2200, is unlikely to come into view. Resistance is at 1.2355. To sustain the rapid buildup in momentum, GBP must remain below 1.2395.”

1-3 WEEKS VIEW: “Despite dropping sharply upon opening today, there has been no significant increase in downward momentum. However, GBP is likely to trade with a downward bias towards 1.2245. Further decline below 1.2245 is not ruled out, but currently, GBP does not appear to have enough momentum to reach 1.2200. The downward bias will remain intact as long as 1.2435 is not breached.”

• GBP/USD depreciates around 1% amid US President Donald Trump’s tariff threats against China, Canada, and Mexico.
• US announced plans to impose a 25% tariff on Canadian and Mexican goods, while China will face a 10% tariff.
• The British Pound struggles as the BoE is widely anticipated to deliver a 25 basis point rate cut in February.

GBP/USD continues its decline for the fifth consecutive session, hovering around 1.2270 during Monday’s Asian trading hours. The pair has weakened by around 1% as the US Dollar Index (DXY), which measures the US Dollar (USD) against six major peers, gains strength following US President Donald Trump’s tariffs against China, Canada, and Mexico.

On Saturday, the US informed that it would impose 25% tariffs on Canadian and Mexican goods, while Chinese exports would face a 10% tariff. Additionally, Canadian energy exports will be subject to a 10% tariff, according to CTV. These tariffs are set to take effect on Tuesday and will remain in place until the fentanyl overdose crisis is "sorted." In response, Canada, Mexico, and China have pledged retaliatory measures against the sweeping new trade restrictions.

Meanwhile, US inflation data reinforced the Federal Reserve’s (Fed) hawkish stance on the monetary policy outlook. The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, rose 0.3% MoM in December, up from 0.1% in November. On an annual basis, PCE inflation accelerated to 2.6% from the previous 2.4%, while core PCE, which excludes food and energy, remained steady at 2.8% YoY for the third straight month.

The Pound Sterling (GBP) faces additional downside risks as traders anticipate the Bank of England (BoE) will restart its policy-easing cycle, likely cutting interest rates by 25 basis points (bps) to 4.5% in February. Investors are closely watching the BoE’s monetary policy decision next Thursday, with expectations that policymakers may adopt a dovish stance, given recent signs of slowing inflation, despite continued wage growth acceleration.

• GBP/USD falls 0.16% to 1.2398, continuing its decline as Trump threatens tariffs on Canada and Mexico.
• US inflation aligns with expectations, Core PCE Index rises 0.2% MoM; Fed's rhetoric supports dollar strength.
• US Dollar Index (DXY) climbs 0.20%, reflecting gains against major currencies, including the Pound.

The Pound Sterling extended its losses for the second consecutive day as US President Donald Trump tariffs rhetoric sent ripples across the financial markets. Therefore, the Greenback remains bid, as economic data takes the backseat. The GBP/USD trades at 1.2398, down 0.16%.

GBP/USD dips amid heightened US trade tension, persistent UK economic concerns.

On Thursday, Trump reiterated that he will impose tariffs on Mexico and Canada, which lent a lifeline to the US Dollar, which was posting losses before ending the day in the green. Most G10 Forex currencies, depreciated, including Sterling.

Worries about an economic slowdown in the UK kept the GBP pressured amid concerns on the budget presented by chancellor Rachel Reeves.

In the meantime, inflation in the United States (USD) rose in December. The Core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) preferred inflation gauge increased by 0.2% MoM as expected, up from November 0.1%. On an annual basis, the underlying PCE remained unchanged at 2.8% as projected.

Fed speakers are also providing some support for the US Dollar, as Governor Michelle Bowman said that inflation risks are tilted to the upside. At the time of writing, Chicago’s Fed President Austan Goolsbee added that he liked December’s inflation report, stating that he’s comfortable that inflation is on the path to 2% target.

The data maintained the “status quo.” US equities continued to trend higher, and the buck gained some traction, as the GBP/USD dropped from around 1.2430 to 1.2408.

The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, is rising 0.20% up at 108.41. The US 10-year Treasury bond yield drops one and a half basis points to 4.50%, after the data.

GBP/USD Price Forecast: Technical outlook

Given the backdrop, the GBP/USD bias remains downwards. Following the pair’s clash at the 50-day Simple Moving Average (SMA) near 1.2500, it has trended lower, extending its fall beneath 1.2400. If Sterling weakens further, the next support would be intermediate support at January’s 23 low of 1.2292, before challenging January 17 swing low of 1.2159.

The Pound Sterling (GBP) is little changed on the session after dropping back against the USD in late trade yesterday, Scotiabank's Chief FX Strategist Shaun Osborne notes.

GBP little changed on the day

"UK data showed a smaller than expected, 0.1% rise in UK house prices in the Nationwide’s survey for January. Prices are up 4.1% in the year, down from December’s 4.7% clip."

"Spot is a little softer on the session but GBP losses are holding a little above the mid-week low (where a bullish 'hammer' pattern formed) at 1.2393. Cable should find support around 1.2390/95 today but it may be hard to resist a broader strengthening in the USD in the coming days."

"A deeper retracement of the mid-January rebound to test the 1.23 are looks a risk. Resistance is 1.2460/70."

GBP/USD is range-bound around 1.2450, BBH FX analysts note.

Most indicators of UK near-term activity decline

"The UK January Lloyds business barometer was mixed. The headline index fell to a 13-month low at 37 vs. 39 in December suggesting business investment backdrop remains sluggish. However, the 12-month ahead business activity index improved to 51 vs. 47 in December."

"The Bank of England (BOE) is widely expected to slash the policy rate 25bps to 4.50% next Thursday. Most indicators of UK near-term activity have declined, and services inflation cooled more than the BOE anticipated in December."

• GBP/USD extends its decline as risk aversion rises, driven by renewed tariff threats from US President Donald Trump.
• Trump reiterated plans to impose a flat 25% import tax on all goods entering the US from Canada and Mexico.
• The Pound Sterling struggles as traders expect the BoE to continue its rate-cut cycle in February.

GBP/USD continues its losing streak for the fourth successive session, trading around 1.2420 during the Asian hours on Friday. This downside is attributed to the improved US Dollar (USD) amid increased risk aversion following renewed tariff threats from US President Donald Trump.

President Trump reiterated plans late Thursday to impose a flat 25% import tax on all goods entering the US from Canada and Mexico, citing concerns over fentanyl. The first wave of tariffs on both countries is set to take effect on February 1, according to Reuters. Additionally, Trump hinted at the possibility of imposing tariffs on Canadian and Mexican Oil exports. He also reaffirmed his threat on X (formerly Twitter) to levy 100% tariffs on BRICS nations if they attempt to introduce an alternative currency to challenge the US dollar in international trade.

The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, trades above 108.00 at the time of writing. The Greenback strengthened after the US Federal Reserve (Fed) adopted a cautious tone regarding its policy decision in January.

The US Federal Reserve held its overnight borrowing rate steady in the 4.25%-4.50% range at its January meeting on Wednesday, as widely expected. This decision followed three consecutive rate cuts since September 2024, totaling a full percentage point.

During the press conference, Fed Chair Jerome Powell emphasized that the central bank would need to see “real progress on inflation or some weakness in the labor market” before considering any further adjustments to monetary policy.

The Department of Commerce reported that Gross Domestic Product Annualized (Q4) fell to 2.3% from 3.1%, missing expectations of 2.6%. Additionally, Initial Jobless Claims for the week ending January 24 came in at 207K, below forecasts of 220K but an improvement from the previous week’s 223K.

Investors now turn their attention to key US data releases later on Friday, including Personal Consumption Expenditures (PCE), Personal Income and Spending figures, and the Chicago Purchasing Managers' Index (PMI).

The Pound Sterling (GBP) faces pressure as traders anticipate the Bank of England (BoE) will resume its rate-cut cycle at next week’s policy meeting. The BoE is expected to lower interest rates by 25 basis points (bps) to 4.5% in February, marking its third cut since August, when borrowing costs peaked at 5.25%.