EUR/USD Price Analysis – Jan 20, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained momentum, edging higher towards the 1.0321 level. The pair's upward movement was supported by a decline in the safe-haven demand for the US Dollar (USD), particularly in anticipation of US President-elect Donald Trump’s inauguration.
Furthermore, the gains in EUR/USD were amplified as investors positioned themselves ahead of the event.
However, the outlook for the Euro (EUR) remains clouded, as market participants expect the European Central Bank (ECB) to implement a series of interest rate cuts in its upcoming policy meetings, adding uncertainty to the pair's future direction.
EUR Outlook Uncertain Amid Risk-On Sentiment and ECB Rate Cut Expectations
On the EUR front, the shared currency has been gaining strength as investors adopt a risk-on approach, awaiting US President-elect Donald Trump’s inauguration.
Despite this, the outlook for the Euro (EUR) remains uncertain. as traders are concerned that the European Central Bank (ECB) may cut interest rates multiple times in the coming months.
The market is pricing in a 100 basis point reduction by mid-summer, with a 25 basis point cut expected in each of the next four ECB meetings.
These dovish expectations are driven by the belief that Eurozone inflation will slow and return to the ECB’s target of 2%. A key factor contributing to this outlook is the expectation of lower service sector inflation this year.
Analysts at Capital Economics noted that the small rise in inflation in December was mainly due to transport and holiday sectors, which are sensitive to oil prices. They anticipate oil prices will decline, easing inflationary pressures in the Eurozone.
Therefore, the ECB's expected rate cuts and subdued inflation outlook could weaken the Euro, limiting gains for the EUR/USD pair, especially if the US Dollar strengthens due to domestic policies.
US Dollar Pressure and Fed Policy Expectations Could Support EUR/USD Gains
On the US front, the broad-based US Dollar Index (DXY), which measures the dollar's value against six major currencies, has been declining towards the 109.00 level.
The Greenback is under pressure as investors react to the expectation that President-elect Donald Trump will soon declare a national emergency upon taking office.
This would allow him to ramp up domestic energy production and undo some of the climate change policies put in place by President Joe Biden, according to Bloomberg.
Apart from this, Fox News Digital reports that Trump plans to sign over 200 executive orders on his first day in office, which may include policies like stricter immigration controls, tax cuts, and higher import tariffs.
These measures are expected to boost US growth and inflation, which could ultimately be favorable for the US Dollar. Investors anticipate that these changes will allow the Federal Reserve (Fed) to keep interest rates at current levels for a longer period.
Hence, the CME FedWatch tool shows that traders expect the Fed to maintain borrowing rates in the 4.25%-4.50% range for the next three policy meetings.
However, analysts at Morgan Stanley suggest that the Fed may cut interest rates in March, as inflation showed signs of slowing in December.
The Consumer Price Index (CPI) report for December revealed that core inflation, which excludes food and energy prices, rose at a slower pace of 3.2% year-over-year.
Therefore, the declining US Dollar and expectations of longer Fed rate hikes could weaken the USD, supporting potential gains for the EUR/USD pair, especially if Eurozone inflation remains subdued.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.03055, up 0.38%, as the pair hovers around key technical levels amid cautious sentiment in the forex market. The pair has been attempting to recover from recent lows, but upside momentum remains constrained by overhead resistance levels.
On the 4-hour chart, the immediate pivot point stands at $1.03295, a critical threshold that the pair is currently testing. A decisive move above this level could open the door to further gains, with immediate resistance at $1.03720, followed by secondary hurdles at $1.04338 and $1.05030.
However, failure to sustain momentum above the pivot point may reinforce downside pressure, with key support levels at $1.02406, followed by $1.01867, and deeper support at $1.01288, which could act as potential rebound zones.
From a technical perspective, the 50-day EMA, currently positioned at $1.02841, suggests a mildly bullish bias, with prices hovering slightly above it. This could indicate short-term buying interest, but a sustained break below the EMA may signal renewed bearish pressure.
In conclusion, a short position below $1.03304 could offer a favorable risk-reward setup, targeting $1.02405 for take-profit, with a stop-loss placed at $1.03851, ensuring protection against potential upward spikes.
Traders are advised to monitor market sentiment closely, as upcoming economic data releases and geopolitical developments could introduce volatility.
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GBP/USD Price Analysis – Jan 20, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair extended its bullish momentum, trading firmly around the 1.2197 level and reaching an intraday high of 1.2222.
The rise in the currency pair was somewhat unexpected, as weak UK retail sales data for December typically signals a slowing economy and would usually weaken the GBP.
However, the increase in demand for UK gilts, which are considered safer investments during uncertain times, may have supported the GBP. Additionally, a broader appetite for riskier assets could have played a role in the pair's upward movement, as investors seemed willing to take on more risk despite the weak economic data.
Furthermore, the pair benefited from a weakening US Dollar as its safe-haven appeal diminished ahead of the swearing-in ceremony of Donald Trump as President.
GBP/USD Gains Driven by Weak Retail Sales, Lower Gilt Yields, and BoE Rate Cut Expectations
On the GBP front, the gains in the GBP/USD currency pair were partly driven by increased demand for UK gilts.
Despite weak UK retail sales data for December, which typically signals a slowing economy, the rising appetite for riskier assets ahead of US President-elect Donald Trump’s inauguration supported the Pound.
The demand for UK gilts caused yields on 30-year bonds to drop, from a more-than-26-year high of 5.47% on January 13 to around 5.20%.
This decline in yields reflects investors seeking the safety of government bonds, which in turn helped lower borrowing costs for the UK government.
However, the surprise drop in the UK Retail Sales for December added further pressure, accelerating expectations for the Bank of England (BoE) to adopt a more dovish stance. Retail Sales contracted by 0.3%, much worse than the expected 0.4% growth.
This disappointing data led analysts, including those at Oxford Economics, to forecast a 100 basis point rate cut by the BoE, bringing interest rates down to 3.75% by the end of the year.
Despite the Pound's recent rise, UK gilt yields have fallen more sharply, reflecting growing concerns about a potential BoE rate cut.
The drop in yields has kept the focus on dovish BoE expectations, which tend to be negative for the Pound.
However, UK equity markets have surged as Chancellor Rachel Reeves announced she wouldn’t need to raise taxes or cut public spending to meet her economic goals.
Looking ahead, the next key event for the Pound will be the release of UK employment data for the three months ending November, due on Tuesday, which could impact further market movement.
US Dollar Weakens Ahead of Trump’s Inauguration, Outlook Remains Positive Amid Economic Policy Expectations
On the US front, the broad-based US Dollar weakened on Monday as the safe-haven appeal of the currency diminished ahead of Donald Trump’s swearing-in ceremony as President. This helped the GBP/USD pair rebound near the 1.2200 level during the European session.
The US Dollar Index (DXY), which measures the Dollar's strength against six major currencies, dropped to around 109.00, reflecting reduced demand for the Greenback.
Despite this short-term weakness, the broader outlook for the US Dollar remains optimistic. Investors expect Trump’s economic policies to be growth-focused and inflationary, potentially supporting the US economy in the long run.
Reports suggest Trump plans to sign over 200 executive orders on his first day, potentially addressing issues like immigration, tariffs, and tax cuts, which could have significant economic implications.
Looking ahead, the US economic calendar is relatively light this week, with the key release being the S&P Global preliminary PMI data for January, due on Friday. According to the CME FedWatch tool, traders are anticipating more than one 25-basis-point interest rate cut this year, with the first expected in June.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.22141, up 0.44%, as the pair edges higher in early trading amid cautious market sentiment. The pound has shown resilience, but upside momentum remains constrained by key resistance levels, with investors closely monitoring macroeconomic data and central bank cues.
On the 4-hour chart, the immediate pivot point at $1.22453 is a crucial level to watch. A break above this threshold could pave the way for further upside, targeting immediate resistance at $1.23125, followed by higher resistance levels at $1.24064 and $1.24962.
However, failure to clear the pivot point may invite renewed selling pressure, with immediate support located at $1.21034, followed by deeper levels at $1.20174 and $1.19346, which could act as potential rebound zones if downward momentum intensifies.
Technically, the 50-day EMA, currently positioned at $1.22441, suggests a neutral to bearish outlook, as the price remains slightly below this key level. A sustained move beneath the EMA may indicate further bearish pressure, potentially driving the pair toward support zones.
In conclusion, a short position below $1.22465 could provide an attractive risk-reward setup, with a take-profit target set at $1.21019 and a stop-loss placed at $1.23155 to mitigate potential upside risks.
Traders should remain vigilant as market dynamics could shift swiftly amid changing economic conditions and geopolitical factors.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- GBP/USD faces immediate resistance at $1.23125, with further upside barriers at $1.24064 and $1.24962, while key support levels are positioned at $1.21034, $1.20174, and $1.19346.
- The pair is hovering slightly below the 50-day EMA at $1.22441, indicating potential bearish momentum if downward pressure persists.
- A sell strategy below $1.22465, targeting $1.21019, with a stop-loss at $1.23155, could offer a favorable trade setup in the near term.
GBP/USD is trading at $1.22141, up 0.44%, as the pair edges higher in early trading amid cautious market sentiment. The pound has shown resilience, but upside momentum remains constrained by key resistance levels, with investors closely monitoring macroeconomic data and central bank cues.
On the 4-hour chart, the immediate pivot point at $1.22453 is a crucial level to watch. A break above this threshold could pave the way for further upside, targeting immediate resistance at $1.23125, followed by higher resistance levels at $1.24064 and $1.24962.
However, failure to clear the pivot point may invite renewed selling pressure, with immediate support located at $1.21034, followed by deeper levels at $1.20174 and $1.19346, which could act as potential rebound zones if downward momentum intensifies.
Technically, the 50-day EMA, currently positioned at $1.22441, suggests a neutral to bearish outlook, as the price remains slightly below this key level. A sustained move beneath the EMA may indicate further bearish pressure, potentially driving the pair toward support zones.
In conclusion, a short position below $1.22465 could provide an attractive risk-reward setup, with a take-profit target set at $1.21019 and a stop-loss placed at $1.23155 to mitigate potential upside risks.
Traders should remain vigilant as market dynamics could shift swiftly amid changing economic conditions and geopolitical factors.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.22465
Take Profit – 1.21019
Stop Loss – 1.23155
Risk to Reward – 1: 2
Profit & Loss Per Standard Lot = +$1446/ -$690
Profit & Loss Per Mini Lot = +$144/ -$69
GBP/USD Price Analysis – Jan 15, 2025
Daily Price Outlook
During the European trading session, the GBP/USD pair struggled to gain positive momentum, staying relatively subdued around the 1.2223 mark and even dipping to an intra-day low of 1.2161.
This hesitation can largely be attributed to the cautious sentiment among investors, who are now focusing on the upcoming high-impact Consumer Price Index (CPI) data from both the UK and the US.
Another factor putting pressure on the GBP/USD pair is the recent surge in UK borrowing costs, which has contributed to a weakening outlook for the GBP. This has become a key factor weighing down the GBP/USD pair as investors remain wary of the potential impact on the UK economy.
On the flip side, the US Dollar (USD) is also struggling, lingering near its weekly low after softer US producer prices were released on Tuesday.
This slowdown in inflation has provided some relief to the dollar, limiting any significant downside moves for the GBP/USD pair.
As the market looks ahead to these important data releases, the currency pair is likely to remain in a state of uncertainty, with the next major price movement contingent on the outcomes of these economic reports.
GBP/USD Struggles Amid Rising UK Borrowing Costs and Fed's Hawkish Stance
On the GBP front, the recent rise in UK borrowing costs has created a negative sentiment around the British Pound.
This has become a key factor pressuring the GBP/USD pair, as higher borrowing costs can weigh on economic activity and investor confidence. As a result, the pound remains under pressure, struggling to recover strongly in the market.
Meanwhile, the US Dollar (USD) is hovering near its weekly low after weaker-than-expected US producer price data earlier this week.
This has limited further losses for the GBP/USD pair. However, the Federal Reserve’s increasingly hawkish stance is providing support for the dollar.
The Fed’s position suggests it may not reduce interest rates anytime soon, helping maintain higher US Treasury bond yields and boosting the dollar’s appeal.
Market participants are now confident that the Fed will pause its rate-cutting plans during its next meeting. This belief was reinforced by last Friday’s strong US Nonfarm Payrolls (NFP) report, which signaled a healthy job market.
These developments support USD bulls and suggest that any recovery attempt in the GBP/USD pair could face selling pressure, keeping gains limited. Traders are likely to watch upcoming economic data closely for further direction.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.22109, up 0.10%, as the pair consolidates below a critical resistance zone.
The key pivot point at $1.22439 marks a significant level for market direction. A failure to break above this level could invite further selling pressure, aligning with the broader downtrend.
Immediate resistance lies at $1.22439, with additional hurdles at $1.23155 and $1.23335. Conversely, a decisive break below the support level of $1.21019 may trigger sharper declines, with subsequent support levels at $1.20194 and $1.19346.
The bearish bias is supported by the descending trendline and the 50-day SMA at $1.23335, which caps upside potential.
The risk-to-reward setup favors selling below $1.22439, with a target of $1.21019 and a stop loss at $1.23155.
This trade setup offers a potential profit of $1,420 per standard lot against a risk of $716, with a favorable risk-to-reward ratio of 1:1.9.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Bearish Bias: GBP/USD faces resistance at $1.22439, aligning with the descending trendline and the 50-day SMA.
- Support Levels: Key supports are $1.21019 and $1.20194, critical for gauging potential declines.
- Risk-Reward Setup: Selling below $1.22439 offers a 1:1.9 risk-to-reward ratio, targeting $1,420 per standard lot profit.
GBP/USD is trading at $1.22109, up 0.10%, as the pair consolidates below a critical resistance zone.
The key pivot point at $1.22439 marks a significant level for market direction. A failure to break above this level could invite further selling pressure, aligning with the broader downtrend.
Immediate resistance lies at $1.22439, with additional hurdles at $1.23155 and $1.23335. Conversely, a decisive break below the support level of $1.21019 may trigger sharper declines, with subsequent support levels at $1.20194 and $1.19346.
The bearish bias is supported by the descending trendline and the 50-day SMA at $1.23335, which caps upside potential.
The risk-to-reward setup favors selling below $1.22439, with a target of $1.21019 and a stop loss at $1.23155.
This trade setup offers a potential profit of $1,420 per standard lot against a risk of $716, with a favorable risk-to-reward ratio of 1:1.9.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.22439
Take Profit – 1.21019
Stop Loss – 1.23155
Risk to Reward – 1: 1.9
Profit & Loss Per Standard Lot = +$1420/ -$716
Profit & Loss Per Mini Lot = +$142/ -$71
GBP/USD Price Analysis – Jan 13, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has continued its bearish slide, struggling to find any support and remaining around 1.2149.
It even touched an intra-day low of 1.2123. This downward movement can be attributed to ongoing concerns over the UK's economic troubles, with stubborn inflation and stagnant growth fueling worries of stagflation. The British Pound (GBP) has been facing significant pressure as a result.
Meanwhile, the US dollar surged to its highest level in over two years on the back of strong US jobs data released on Friday.
This combination of weak economic data from the UK and a stronger US Dollar has been pushing the GBP/USD pair lower.
GBP Struggles Amid Stagflation and Rising Bond Yields, Weighing on GBP/USD
On the GBP front, the British Pound (GBP) continues to struggle, primarily due to concerns about stagflation in the UK. Stubborn inflation combined with weak economic growth has created a challenging environment for the currency.
This combination is raising fears that the UK economy may remain stuck in a difficult situation for longer, keeping the GBP under pressure.
In addition to economic struggles, the recent increase in UK government bond yields is adding to the anxiety about the country’s financial stability.
Rising bond yields signal that investors may be worried about the UK's fiscal health, which is weakening confidence in the Pound.
Therefore, the UK’s economic struggles, including stagflation and rising bond yields, are weakening the British Pound (GBP).
Meanwhile, the US Dollar (USD) strengthens due to positive economic data. As a result, the GBP/USD pair is likely to continue its bearish trend.
US Dollar Strengthens on Positive Jobs Data, Weighing on GBP/USD Outlook
On the US front, the broad-based US dollar has gained strong momentum, reaching a two-year high against other currencies.
This surge was triggered by positive US jobs data, particularly the Nonfarm Payrolls (NFP) report, which showed the US economy added 256,000 jobs in December.
This exceeded expectations and boosted confidence in the US economy. Additionally, the unemployment rate dropped unexpectedly to 4.1%, reinforcing the view that the Federal Reserve (Fed) may maintain its aggressive stance on interest rates.
Investors are now expecting the Fed to pause its rate-cutting cycle at its upcoming policy meeting. Some are even speculating that the Fed may raise interest rates later this year, further supporting the US dollar.
As a result, US Treasury bond yields are likely to remain elevated, which adds to the strength of the US dollar.
This bullish outlook for the dollar, coupled with a risk-off sentiment in the market, is putting pressure on other currencies, including the British Pound (GBP).
However, the Relative Strength Index (RSI) on the daily chart for the GBP/USD pair is showing signs of being slightly oversold.
This suggests that the pair may experience a period of consolidation or a modest bounce before continuing its downward movement.
Investors may want to wait for a more favorable entry point before positioning for further declines in GBP/USD.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.21306, down 0.53% on the day, reflecting continued selling pressure amid a stronger U.S. dollar.
The 4-hour chart indicates that $1.21993, the pivot point, serves as a critical barrier for any potential recovery. Below this level, immediate support is located at $1.20880, with subsequent targets at $1.20174 and $1.19346.
On the upside, resistance levels are positioned at $1.23209, $1.24064, and $1.24962. The 50-day EMA at $1.24042 underscores a bearish outlook, with prices consistently trading below this trend indicator.
The RSI suggests a continuation of bearish momentum, though it approaches oversold territory, hinting at a possible consolidation phase.
The preferred strategy is to enter short positions below $1.22011, with a target of $1.20898 and a stop-loss set at $1.22710.
A sustained breach of the immediate support at $1.20880 could accelerate selling pressure, while a rebound above the pivot point might provide an opportunity for bulls to retest resistance levels. Traders should monitor the pair closely for volatility near these key levels.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Pivot Level: Bearish sentiment persists below $1.21993; recovery faces resistance at $1.23209.
- Support Levels: Key supports at $1.20880, $1.20174, and $1.19346 suggest further downside risk.
- Indicators: 50 EMA at $1.24042 confirms downward trend; RSI indicates potential consolidation.
The GBP/USD pair is trading at $1.21306, down 0.53% on the day, reflecting continued selling pressure amid a stronger U.S. dollar.
The 4-hour chart indicates that $1.21993, the pivot point, serves as a critical barrier for any potential recovery. Below this level, immediate support is located at $1.20880, with subsequent targets at $1.20174 and $1.19346.
On the upside, resistance levels are positioned at $1.23209, $1.24064, and $1.24962. The 50-day EMA at $1.24042 underscores a bearish outlook, with prices consistently trading below this trend indicator.
The RSI suggests a continuation of bearish momentum, though it approaches oversold territory, hinting at a possible consolidation phase.
The preferred strategy is to enter short positions below $1.22011, with a target of $1.20898 and a stop-loss set at $1.22710.
A sustained breach of the immediate support at $1.20880 could accelerate selling pressure, while a rebound above the pivot point might provide an opportunity for bulls to retest resistance levels. Traders should monitor the pair closely for volatility near these key levels.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.22011
Take Profit – 1.20898
Stop Loss – 1.22710
Risk to Reward – 1: 1.5
Profit & Loss Per Standard Lot = +$1113/ -$699
Profit & Loss Per Mini Lot = +$111/ -$69
GBP/USD Price Analysis – Jan 08, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair found a mild bid around the 1.2494 level. However, buyers struggled to gain any strong momentum amid the combination of factors including risk aversion, tepid UK retail sales, and dampened Fed rate cut expectations that has pressured the GBP/USD pair.
This leaves the pair struggling for momentum, likely keeping it range-bound unless stronger economic catalysts emerge to drive price action.
US Dollar Strengthens Amid Positive Economic Data and Fed's Hawkish Stance, Weighing on GBP/USD
On the US front, the broad-based US dollar gained traction and remains bullish as the US Dollar Index (DXY) stays above 108.50. The US Dollar saw a boost following a rise in the 10-year US Treasury bond yield, which climbed by over 1% to 4.67%.
This increase signals shifting investor sentiment around the Federal Reserve’s interest rate outlook, with expectations leaning toward higher rates for longer.
The positive economic data from the US also played a role. On the data front, the ISM Services PMI for November surged to 54.1, beating expectations of 53.3, with the Prices Paid Index rising sharply to 64.4, indicating inflation pressures.
Meanwhile, the ISM Manufacturing PMI improved slightly to 49.3 in December, signaling some stability in the manufacturing sector. These figures suggest that the US economy remains resilient, further supporting the dollar’s strength.
In contrast, concerns about future economic policies under President-elect Trump, such as potential tariffs, and the Fed’s cautious approach toward rate cuts in 2025, have added uncertainty. This combination of factors, including persistent inflation, makes traders wary.
For the GBP/USD pair, the strong US dollar, driven by these factors, is likely to keep pressure on the Pound, with the pair remaining sensitive to any shifts in US economic or Fed policy outlooks.
UK Retail Sales Growth Unable to Lift GBP Amid Risk Aversion and Economic Concerns
On the data front, UK Like-For-Like Retail Sales rose by 3.1% for the year ending in December, showing positive growth. However, this good news wasn't enough to support the GBP. Despite the retail sales increase, the Pound struggled to gain momentum as market sentiment shifted toward risk aversion.
The risk-off mood was driven by weaker global economic outlooks and growing concerns about potential inflationary pressures. This, in turn, caused investors to pull back from riskier assets, limiting the Pound's upside potential.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.24863, up 0.08% on the day, hovering just below the pivot point of $1.25034. The 4-hour chart highlights immediate resistance at $1.25601, followed by key levels at $1.26142 and $1.26639, indicating areas where bullish momentum may face challenges.
On the downside, immediate support is at $1.24349, with subsequent levels at $1.23624 and $1.23014, marking critical zones for potential bearish moves.
The RSI at 48 reflects neutral market sentiment, while the 50 EMA at $1.25028 is nearly aligned with the pivot point, suggesting a critical zone for price action.
A decisive break below $1.25029 could initiate selling pressure, with the first target at $1.24338. Conversely, a sustained move above $1.25601 may signal bullish momentum, targeting higher resistance levels.
Traders are advised to watch the $1.25034 pivot point closely. Selling below this level offers a favorable risk-to-reward setup, with a take-profit target of $1.24338 and a stop-loss at $1.25520.
However, a break above $1.25601 could attract buying interest, signaling potential upside toward $1.26142. Market participants should monitor economic releases and central bank statements for directional cues.
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GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- Immediate resistance at $1.25601; next levels: $1.26142 and $1.26639.
- Support levels include $1.24349, $1.23624, and $1.23014.
- RSI at 48 and 50 EMA at $1.25028 highlight a neutral bias, with potential for breakout moves.
GBP/USD is trading at $1.24863, up 0.08% on the day, hovering just below the pivot point of $1.25034. The 4-hour chart highlights immediate resistance at $1.25601, followed by key levels at $1.26142 and $1.26639, indicating areas where bullish momentum may face challenges.
On the downside, immediate support is at $1.24349, with subsequent levels at $1.23624 and $1.23014, marking critical zones for potential bearish moves.
The RSI at 48 reflects neutral market sentiment, while the 50 EMA at $1.25028 is nearly aligned with the pivot point, suggesting a critical zone for price action.
A decisive break below $1.25029 could initiate selling pressure, with the first target at $1.24338. Conversely, a sustained move above $1.25601 may signal bullish momentum, targeting higher resistance levels.
Traders are advised to watch the $1.25034 pivot point closely. Selling below this level offers a favorable risk-to-reward setup, with a take-profit target of $1.24338 and a stop-loss at $1.25520.
However, a break above $1.25601 could attract buying interest, signaling potential upside toward $1.26142. Market participants should monitor economic releases and central bank statements for directional cues.
GBP/USD - Trade Ideas
Entry Price – Sell Below 1.25029
Take Profit – 1.24338
Stop Loss – 1.25520
Risk to Reward – 1: 1.4
Profit & Loss Per Standard Lot = +$691/ -$491
Profit & Loss Per Mini Lot = +$69/ -$49
GBP/USD Price Analysis – Jan 06, 2025
Daily Price Outlook
During the European trading session, the GBP/USD currency pair has been gaining momentum, holding steady around the 1.2472 mark and reaching an intraday high of 1.2492.
The recent upward movement can largely be attributed to the ongoing recovery in the British Pound (GBP), as traders remain cautious about the US Dollar’s (USD) potential strength. Despite this, the upside for GBP/USD might be limited due to the hawkish stance from the Federal Reserve (Fed).
Federal Reserve has already reduced interest rates by one percentage point since September 2024 and is expected to slow down further rate cuts this year.
This continues to provide support for the USD. Investors will be keeping an eye on the upcoming speech from Fed Governor Lisa Cook later today, as her comments may offer more insights into the central bank's rate decisions moving forward.
Meanwhile, the Pound faces additional pressure from growing dovish expectations surrounding the Bank of England (BoE). The markets are now pricing in a 60 basis point interest rate cut by the BoE this year, up from 53 bps just a week ago.
These factors are weighing on the GBP, potentially limiting the scope for further recovery. As the day progresses, market participants will be closely watching both central banks for any updates that could shift the outlook for the GBP/USD pair.
BoE's Dovish Outlook and Its Impact on the Pound Sterling (GBP)
On the GBP front, the rising expectations for a more dovish stance from the Bank of England (BoE) could put pressure on the British Pound (GBP).
The market is now expecting nearly 60 basis points (bps) of interest rate cuts from the BoE this year, up from 53 bps in late December. This suggests that investors are becoming more cautious about the BoE's ability to support the Pound in the coming months.
Matthew Ryan, head of market strategy at Ebury, mentioned that BoE policymakers seem to be divided on the future path for UK interest rates.
This division reflects the complex situation in the UK economy. While consumer demand remains fragile, other factors, like the government's Autumn Budget and potential tariff proposals from Trump, are adding inflationary pressure, making it harder to find a clear direction.
These mixed signals from the BoE make the outlook for the Pound uncertain. While weaker consumer demand suggests a need for lower interest rates, inflationary concerns might prevent the central bank from acting too quickly.
As a result, the GBP could face challenges if investors continue to price in a slower pace of rate cuts or even potential rate cuts later this year.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.24409, up 0.19% for the day as the pair shows signs of consolidation near its pivot point at $1.24787.
The 4-hour chart reflects cautious optimism, but the broader trend remains under pressure as the price trades below the 50-day EMA at $1.25095, signaling bearish momentum in the near term.
Immediate support is located at $1.24089, which is critical for maintaining stability. A break below this level could drive the pair lower toward $1.23494 and $1.23014, signaling deeper retracements.
Conversely, resistance stands at $1.25601, with additional barriers at $1.26142 and $1.26639. A breakout above $1.25601 could trigger a bullish move, but such a scenario remains contingent on a sustained push above the pivot point.
The Relative Strength Index (RSI) at 44 indicates weak momentum, leaning slightly toward bearish sentiment. This aligns with the broader technical outlook, suggesting that selling opportunities below the pivot may yield better risk-reward dynamics.
For intraday traders, selling below $1.24785, with a target of $1.24097, appears prudent, while a stop-loss at $1.25126 limits potential losses in case of a reversal.
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