Mon, Feb 10, 2025

GBPUSD is moving in an Ascending channel, and the market has reached the higher low area of the channel

#GBPUSD Analysis Video

The GBP/USD pair, a key indicator in the forex market, is off to a quiet start this week. Despite a modest rebound on Friday, it’s finding it tough to build on that momentum. Several global and local factors are at play, making traders cautious about the currency pair’s near-term outlook. Let’s dive deeper into the dynamics shaping the GBP/USD exchange rate.

What’s Keeping GBP/USD Under Pressure?

The Mighty US Dollar Holds Its Ground

The US Dollar (USD) remains a formidable force in the market, buoyed by strong fundamentals. While there was a slight dip in the dollar’s strength on Friday, thanks to signs of inflation cooling, it remains supported by other factors:

  • Hawkish Federal Reserve Stance: The Federal Reserve’s recent decisions have bolstered confidence in the USD. Although the Fed implemented a small rate cut recently, it has hinted at a more measured approach to reducing rates in 2025. This cautious strategy signals that the Fed is prioritizing stability, which adds to the dollar’s appeal.
  • Higher Treasury Yields: Elevated US Treasury bond yields continue to attract investors, adding further support to the greenback.
  • Geopolitical Tensions: Ongoing conflicts, such as the Russia-Ukraine war and unrest in the Middle East, are driving demand for the safe-haven USD. Traders often turn to the dollar during periods of global instability, making it a preferred choice over riskier assets like the British Pound.

IMPACT OF THE RUSSIA UKRAINE WAR ON GOLD AND CRUDE OIL 2

Bank of England’s Dovish Outlook Weighs on GBP

On the flip side, the British Pound (GBP) is struggling under the weight of a cautious Bank of England (BoE). Several developments are limiting the pound’s potential for a significant rally:

  • No Rate Hike: The BoE recently chose to keep interest rates unchanged, a move that didn’t sit well with GBP bulls. More concerning, three members of its Monetary Policy Committee (MPC) even voted to cut rates, signaling a lack of consensus on tightening policy further.
  • Lower Economic Growth Forecasts: The BoE’s downgraded growth outlook for the final quarter of 2024 has added to concerns about the UK economy’s health. This has made traders hesitant to place fresh bets on the pound’s recovery.

Why Traders Are Staying on the Sidelines

Uncertainty Around Economic Data

Both the UK and US economies are set to release crucial data this week, and traders are waiting to gauge the market’s direction. For instance:

  • Bank of England Quarterly Bulletin: This report will provide insights into the BoE’s economic assessment and policy direction, offering clues about what to expect in the coming months.
  • US Consumer Confidence Index: A robust consumer confidence number from the US could further strengthen the USD, putting additional pressure on GBP/USD.

GBPUSD is moving in a descending channel, and the market has fallen from the lower high area of the channel

GBPUSD is moving in a descending channel, and the market has fallen from the lower high area of the channel

These reports are pivotal in determining whether the GBP/USD pair will continue to hover in its current range or break out.

Cautious Market Sentiment

Given the complex interplay of economic and geopolitical factors, market participants are understandably cautious. The lack of clear bullish signals for either currency has kept GBP/USD trading in a narrow range, with no significant breakout in sight.

Key Factors to Watch Moving Forward

Geopolitical Developments

Unfolding events in conflict zones worldwide could sway market sentiment. A surge in tensions would likely benefit the USD, while any signs of resolution could provide some relief for the GBP.

Central Bank Policies

Both the Federal Reserve and the Bank of England are critical to shaping the currency pair’s trajectory. While the Fed’s hawkish approach favors the USD, any unexpected shift in BoE policy—such as a more optimistic economic outlook—could lend support to the pound.

GBPUSD is moving in a downtrend channel, and the market has fallen from the lower high area of the channel

GBPUSD is moving in a downtrend channel, and the market has fallen from the lower high area of the channel

Economic Indicators

Macroeconomic data, such as inflation rates, employment figures, and GDP growth, will remain in the spotlight. Traders will scrutinize these numbers to assess the relative strength of the US and UK economies.

central bank policies

What Lies Ahead for GBP/USD?

As we look ahead, the GBP/USD pair seems to be walking a tightrope, influenced by a mix of global and domestic factors. Here’s what we know:

  1. The USD Remains Strong: Backed by the Fed’s cautious rate-cut approach, higher yields, and geopolitical risks, the dollar is likely to maintain its dominance for now.
  2. The GBP Faces Challenges: With the BoE’s dovish stance and concerns about the UK economy, the pound may struggle to find solid footing.
  3. Patience Is Key: For traders, this is a time to wait and watch. Significant moves in GBP/USD are unlikely until there’s more clarity from upcoming data releases and central bank commentary.

In the short term, GBP/USD could continue to oscillate within a narrow range. But as new information becomes available, we may see the pair break out of its current pattern—whether that’s to the upside or the downside depends on how these various factors unfold.


Don’t trade all the time, trade forex only at the confirmed trade setups

Get more confirmed trade signals at premium or supreme – Click here to get more signals, 2200%, 800% growth in Real Live USD trading account of our users – click here to see , or If you want to get FREE Trial signals, You can Join FREE Signals Now!

Leave a Reply

Your email address will not be published. Required fields are marked *

Also read