GBPUSD:
The GBP/USD pair has remained low for the third consecutive day, trading around the 1.2520 mark during Asian hours on Friday.This decline is attributed to low trading activity after the Christmas break and a strengthening US Dollar, driven by growing expectations of a rate cut by the US Federal Reserve (Fed).
At its December meeting, the Fed cut interest rates by a quarter point and revised its 2025 forecast to include only two rate cuts, down from the previously projected four. However, the likelihood of additional rate cuts next year was tempered by moderate US PCE inflation data.
Dollar gains may be limited, however, as US Treasury yields remain at low levels on Friday. At the time of writing, 2-year and 10-year bond yields stand at 4.33% and 4.58% respectively.The Pound Sterling (GBP) has weakened against its major counterparts amid rising expectations that the Bank of England (BoE) will maintain a dovish policy next year. The UK central bank maintained its key interest rate at 4.75% in December, but a divided vote, with three policymakers in favour of a rate cut, suggested the possibility of a more pronounced easing in 2025.Market expectations for 2025 now include a rate cut of 53 basis points (bps), up from the previously expected 46 bps. This adjustment came after the Monetary Policy Committee (MPC) voted 6-3, with three of the nine members in favour of a 25 bps rate cut, which investors took as a clear signal that a dovish shift was on the horizon.
Trading recommendation: We follow the level of 1.2500, when fixing above it we consider Buy positions, when rebounding we consider Sell positions.
Origin: FreshForex
