GBP/USD Price Analysis – Nov 25, 2024

Daily Price Outlook

During the European trading session, the GBP/USD currency pair maintained its upward momentum, staying well supported around 1.2567 and reaching an intra-day high of 1.2607. This rise was driven by several factors. The Pound Sterling made a strong recovery after a sharp sell-off on Friday, triggered by disappointing UK economic data.

However, market sentiment on Monday was more positive, helping the Pound regain ground. Meanwhile, the US Dollar started the week weaker, with the US Dollar Index (DXY) falling by 0.5% to near 107.00, offering relief to the GBP/USD pair.

Furthermore, technical factors played a role in the Pound's recovery, as it made a notable attempt to break through the key resistance level of 1.2600, signaling strength and resilience. Traders will be watching closely to see if this upward momentum can be sustained in the coming days.

Weaker US Dollar and Positive US Economic Data Fuel GBP/USD Recovery

On the data front, the broad-based US Dollar edged lower at the start of the week, with the US Dollar Index (DXY) trading 0.5% down near 107.00.

This decline helped the Pound Sterling (GBP) gain ground, as it attempted to extend its recovery above the key resistance level of 1.2600 against the US Dollar (USD).

The weaker USD allowed the GBP/USD currency pair to make a strong start to the week, supported by some positive sentiment in the market.

Meanwhile, US 10-year Treasury yields dropped to around 4.33% after investors reacted to President-elect Donald Trump’s choice of Scott Bessent as Treasury Secretary. Some analysts were pleased with the appointment, seeing it as a reassuring sign for Wall Street.

They noted that Bessent’s approach would focus on implementing tariffs, cutting government spending, and maintaining the US Dollar’s role as the world’s reserve currency.

In addition, upbeat flash S&P Global PMI data for November showed an improving US economy, with the Composite PMI rising to 55.3, the highest in 31 months. This suggested that the manufacturing sector’s decline was slowing down, and the services sector was growing faster than expected.

As a result, traders are split on what the Federal Reserve will do at its December meeting, with 56% expecting a 25 basis point rate cut and 44% predicting that rates will stay the same.

Therefore, the weaker US Dollar and positive market sentiment helped the GBP/USD pair extend its recovery above 1.2600. The drop in US Treasury yields and favorable US economic data further supported the Pound's strength, boosting its upward momentum against the Dollar.

BoE's Cautious Stance Supports Pound Recovery Amid Weak UK Economic Data

On the BoE front, the British Pound faced a tough time on Friday due to disappointing UK economic data. Retail Sales in October fell by 0.7%, as shoppers held back spending ahead of the UK government’s new budget.

This decline in consumer activity, along with a weaker-than-expected flash S&P Global/CIPS Composite PMI for November, put pressure on the Pound. Meanwhile, the PMI dropped below the 50.0 threshold, signaling a slowdown in both the manufacturing and services sectors.

However, the Pound is showing signs of recovery, supported by growing market expectations that the Bank of England (BoE) will take a cautious approach to easing monetary policy.

Traders believe the BoE may keep interest rates unchanged at 4.75% during the upcoming December meeting. Furthermore, they are pricing in a 75 basis point rate cut, bringing rates down to 4% by 2025. This outlook has helped stabilize the Pound and may encourage further gains.

Looking ahead, investors will closely monitor speeches from BoE officials, including Deputy Governor Clare Lombardelli and external policy member Swati Dhingra, for any new guidance on the central bank’s interest rate decisions.

GBP/USD – Technical Analysis

GBP/USD is trading at $1.25917, up 0.52%, reflecting a positive tone amid risk-on sentiment. The pair is holding above the pivot point at $1.26373, signaling potential for continued bullish momentum. Immediate resistance is seen at $1.26738, with further targets at $1.27143. However, failure to break higher could lead to consolidation or a pullback toward the pivot.

On the downside, immediate support is located at $1.25673, with key levels at $1.25394 and $1.25019 offering additional safety nets. The 50 EMA at $1.25830 reinforces the bullish structure, providing dynamic support and signaling strong upward momentum.

The RSI at 59 indicates bullish sentiment, suggesting room for further upside. Traders are eyeing an entry below $1.26040 for potential short positions, targeting $1.25552, with a stop loss at $1.26272 to manage risk.

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