GBPUSD:
GBP/USD is unable to capitalize on the modest gains of Friday’s recovery and is fluctuating in a range above the 1.2400 mark at the start of the new week. Spot prices, meanwhile, remain near the lowest level since April 2024 reached last week and appear vulnerable to an extension of the three-month downtrend amid a bullish US Dollar (USD).
In fact, the US Dollar Index (DXY), which tracks the USD against a basket of currencies, is holding near a two-year high amid optimism over US President-elect Donald Trump’s expansionary policies and the Federal Reserve’s (Fed) hawkish outlook. Furthermore, concerns over Trump’s sweeping tariffs, as well as geopolitical risks related to the war between Russia and Ukraine and rising tensions in the Middle East, are supporting the safe-haven Dollar and acting as a headwind for GBP/USD.
Meanwhile, sentiment around the British Pound (GBP) remains weak amid a series of weak UK data recently and doubts over the newly elected Labor government’s fiscal strategy. In addition, the relatively soft stance of the Bank of England (BoE) and the decision to leave interest rates unchanged in December by a split vote may continue to weigh on GBP. This confirms a negative outlook on GBP/USD as traders await the final UK Services PMI to gain fresh momentum.
Trading Recommendation: Watch the level of 1.2400, if consolidated below consider Sell positions, if rebounded consider Buy positions.
Origin: FreshForex
