GBP/USD Price Analysis – Dec 30, 2024
Daily Price Outlook
During the Asian session on Monday, the GBP/USD continued its upward trend for the second day, trading around 1.2567 and reaching a high of 1.2590.
This rally was largely driven by a weaker US Dollar (USD), as market activity was quieter than usual ahead of the New Year holiday, with many traders sidelined.
However, the Pound’s upward momentum might face resistance due to some recent developments in the UK. The Bank of England (BoE) surprised markets with a split vote, where three of its policymakers voted in favor of rate cuts.
This unexpected shift indicates that the BoE might adopt a more aggressive approach to easing in 2025, which could weigh on the GBP in the longer term.
As a result, the GBP/USD pair has gained ground recently, the outlook remains uncertain, Traders will likely continue to monitor any updates from the BoE or the US economy closely for clearer direction.
GBP/USD Gains Amid Weaker US Dollar, but Fed's Cautious Stance Limits Further Upside
On the US front, the US Dollar has stayed under pressure due to lighter trading activity ahead of the New Year holiday.
This has helped the GBP/USD pair extend its gains. The reduced market participation has allowed the British Pound to climb higher, with the pair trading near 1.2567 after hitting an intra-day high of 1.2590. The weaker USD has provided temporary relief for the pair, fueling its upward momentum.
Fed Chair Jerome Powell also emphasized a careful approach to further rate reductions, stating that the Fed "will be cautious about further cuts." This message, paired with the Fed's cautious but firm stance, could lend support to the USD in the near term.
As a result, the GBP/USD has recently gained, the strong US Dollar could limit its growth, especially if the Fed’s outlook reinforces investor confidence in the USD.
Therefore, the weaker US Dollar has temporarily boosted the GBP/USD pair, allowing it to gain. However, the Fed's cautious stance on further rate cuts could support the USD in the near term, limiting the pair's upside potential and capping its growth.
GBP Faces Headwinds Amid BoE’s Cautious Stance on Rate Cuts and Economic Uncertainty
On the GBP front, the British Pound (GBP) faces challenges following a surprise split vote in the Bank of England (BoE). At its December meeting, the BoE held interest rates steady at 4.75%, signaling a cautious approach to future rate cuts.
However, three policymakers supported rate reductions, hinting at a potentially faster pace of easing in 2025.
This uncertainty has raised concerns about the Pound's strength, as markets remain unsure about how quickly or by how much the BoE might lower rates.
BoE Governor Andrew Bailey emphasized a measured approach, stating, "We believe a gradual path for future rate cuts is appropriate, but given the uncertainty in the economy, we cannot commit to specific timing or amounts."
These comments reflect the BoE's cautious outlook amid an uncertain economic environment, which could limit the Pound’s upward momentum.
As a result, the GBP/USD pair has recently gained, the Pound’s prospects may remain constrained by the BoE's hesitation and the broader economic outlook.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.25782, up 0.02% on the session, showing cautious optimism as it approaches the pivot point at $1.25900.
The pair has maintained a modestly bullish tone, supported by its position above the 50 EMA, currently at $1.25441.
However, the pivot point remains a critical level; a failure to break higher could shift momentum to the downside.
Immediate resistance is at $1.26586, with further levels at $1.27292 and $1.27819, forming a significant ceiling for any bullish breakout.
On the downside, support is seen at $1.24776, with secondary levels at $1.24302 and $1.23771, marking key areas of interest for sellers.
The RSI at 57 indicates moderately bullish momentum, suggesting room for further gains without entering overbought territory.
The 4-hour chart reflects consolidation near the pivot, highlighting indecision as traders await a directional move.
A short-term sell strategy below $1.25890 with a target of $1.24989 and a stop loss at $1.26459 aligns with the technical setup.
Alternatively, a sustained break above $1.25900 could set the stage for a test of $1.26586. Traders should monitor market sentiment closely as this level acts as a pivotal barrier for the next trend.
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