Pound sterling trades cautiously ahead of UK jobs and inflation data
Press Hub UCapital
Share:
GBP Holds Gains but Faces Uncertainty Ahead of Key Economic Releases
The Pound Sterling remains steady around 1.2560 against the U.S. Dollar after a better-than-expected UK GDP report but faces upcoming hurdles with the labor market and inflation data next week. While the UK economy grew by 0.1% in Q4 2024, avoiding a recession, the Bank of England’s (BoE) downgraded growth forecasts to 0.75% for the year are keeping investors cautious. The BoE’s recent rate cut to 4.5% on February 6 has introduced uncertainty over future monetary policy. The next CPI report and labor market data will be key drivers of GBP volatility, as they could determine whether the BoE moves ahead with another rate cut in March.
Trump’s Tariff Delay Weakens USD, Lifting GBP/USD
The U.S. Dollar weakened after President Trump held off on immediate reciprocal tariffs, surprising markets that had expected a more aggressive trade stance. Traders had initially positioned for higher U.S. tariffs, which could have driven up inflation and pressured the Federal Reserve to keep rates elevated for longer. However, the delay in implementation has softened demand for the dollar, helping GBP/USD hold near a six-week high. The U.S. Dollar Index (DXY) remains fragile near 107.00, its lowest level in over two weeks, as expectations for Fed rate cuts later this year remain intact. Traders are now focusing on U.S. Retail Sales data, which is expected to show a 0.1% decline in January, a potential signal of softening consumer demand.
Technical Outlook: Pound Sterling Breaks Key Levels, Momentum Builds
GBP/USD has broken above the 50-day Exponential Moving Average (EMA) at 1.2490, reinforcing a bullish trend. The 14-day Relative Strength Index (RSI) is approaching 60.00, and if it sustains above this level, bullish momentum could accelerate further. The next key resistance levels are at 1.2610 (38.2% Fibonacci retracement) and 1.2767 (50% retracement). A break above 1.2610 could open the door for further upside toward 1.2767, while support remains at the February 3 low of 1.2250.
Outlook: Will GBP/USD Hold Gains or Reverse?
The Pound’s trajectory depends on next week’s labor market and CPI data. A weaker-than-expected inflation print could reinforce BoE rate cut bets, pushing GBP/USD lower. Conversely, a strong labor market and sticky inflation could challenge BoE’s easing path, potentially driving GBP/USD higher toward 1.27.
The Pound Sterling remains steady around 1.2560 against the U.S. Dollar after a better-than-expected UK GDP report but faces upcoming hurdles with the labor market and inflation data next week. While the UK economy grew by 0.1% in Q4 2024, avoiding a recession, the Bank of England’s (BoE) downgraded growth forecasts to 0.75% for the year are keeping investors cautious. The BoE’s recent rate cut to 4.5% on February 6 has introduced uncertainty over future monetary policy. The next CPI report and labor market data will be key drivers of GBP volatility, as they could determine whether the BoE moves ahead with another rate cut in March.
Trump’s Tariff Delay Weakens USD, Lifting GBP/USD
The U.S. Dollar weakened after President Trump held off on immediate reciprocal tariffs, surprising markets that had expected a more aggressive trade stance. Traders had initially positioned for higher U.S. tariffs, which could have driven up inflation and pressured the Federal Reserve to keep rates elevated for longer. However, the delay in implementation has softened demand for the dollar, helping GBP/USD hold near a six-week high. The U.S. Dollar Index (DXY) remains fragile near 107.00, its lowest level in over two weeks, as expectations for Fed rate cuts later this year remain intact. Traders are now focusing on U.S. Retail Sales data, which is expected to show a 0.1% decline in January, a potential signal of softening consumer demand.
Technical Outlook: Pound Sterling Breaks Key Levels, Momentum Builds
GBP/USD has broken above the 50-day Exponential Moving Average (EMA) at 1.2490, reinforcing a bullish trend. The 14-day Relative Strength Index (RSI) is approaching 60.00, and if it sustains above this level, bullish momentum could accelerate further. The next key resistance levels are at 1.2610 (38.2% Fibonacci retracement) and 1.2767 (50% retracement). A break above 1.2610 could open the door for further upside toward 1.2767, while support remains at the February 3 low of 1.2250.
Outlook: Will GBP/USD Hold Gains or Reverse?
The Pound’s trajectory depends on next week’s labor market and CPI data. A weaker-than-expected inflation print could reinforce BoE rate cut bets, pushing GBP/USD lower. Conversely, a strong labor market and sticky inflation could challenge BoE’s easing path, potentially driving GBP/USD higher toward 1.27.