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GBP/USD Market Dynamics: Anticipating Central Bank Moves and Economic Indicators

Arslan Butt•Tuesday, January 2, 2024•1 min read

In Tuesday’s early Asian trading session, the GBP/USD pair recorded slight losses, influenced by a modest recovery in the US Dollar (USD). The pair is trading around 1.2725, marking a 0.04% decline.

The USD’s strength comes after the Federal Reserve’s December meeting, where they maintained steady rates and indicated potential rate cuts in 2024 due to faster-than-expected easing of inflation. Market expectations, as per CME Group’s FedWatch tool, suggest a high likelihood of rate reductions starting in March.

Last Friday’s data showed a dip in the US Chicago PMI to 46.9 in December, a fall from November’s 55.8 and below the forecast of 51.0. This week, traders are focusing on the US Nonfarm Payrolls (NFP) data, expected to report a 163K increase in December.

In the UK, the Bank of England (BoE) remains cautious about rate cuts, though markets are pricing in multiple reductions in 2024. The next BoE meeting is scheduled for February 1. Key data releases include the UK S&P Global/CIPS Manufacturing PMI and the US counterpart, along with the crucial FOMC minutes and US employment data later this week.

Technically, GBP/USD is hovering around the significant support level of 1.2720. The pair’s position above the bullish channel’s support line indicates potential for a continued upward trend, targeting 1.2880.

The EMA50 bolsters this bullish outlook, although a break below 1.2720-1.2710 could trigger a bearish correction. Today’s expected range is between 1.2650 support and 1.2800 resistance, with a bullish trend anticipated.

GBP/USD Live Chart

GBP/USD

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.