Bullish View

• Buy the GBP/USD pair and set a take-profit at 1.2665.
• Add a stop-loss at 1.2400.
• Timeline: 1-3 days.

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.2400.
• Add a stop-loss at 1.2665.

(Click on image to enlarge)

The GBP/USD exchange rate remained relatively unchanged this week, as the forex market experienced low volumes due to the Christmas Holiday. It has stalled at 1.2545, a few pips above this month’s low of 1.2478.

The GBP/USD has also stalled because there was no important economic data from the UK and the United States. The only data that came out were Monday's US consumer confidence and UK GDP numbers.

While these are crucial numbers, their impact on the pair was muted because they came a few days after the Bank of England (BoE) and the Federal Reserve made their final decisions of the year.

The BoE left interest rates at 4.75% as it expressed concerns about the country’s inflation, which rose again in November. However, with the UK economy contracting, there are odds that the bank will cut interest rates several times in 2025.

The Fed, on the other hand, slashed interest rates by 0.25%, bringing the year-to-date cuts to 1% It, however, expressed a more hawkish tone as it hinted that it will deliver just two cuts in 2025. The Fed is highly concerned that Trump’s policies will be highly inflationary.

Some of his most notable policies are mass deportations, tax cuts, which will increase the budget deficit, and tariffs.

The next data to watch on Thursday will be initial and continuing jobless jobs numbers. While these are important numbers, their impact on the Fed and the GBP/USD pair will be muted.

GBP/USD Technical Analysis

The daily chart reveals that The GBP/USD exchange rate has been downtrend in the past few days. It has dropped below the important support at 1.2665, its August lows.

The pair has also moved below the 50-day moving average. Also, oscillators like the MACD and the Relative Strength Index (RSI) have all pointed downwards.

On the other hand, it has formed a double-bottom pattern at 1.2478. A double-bottom often leads to more gains. Therefore, the pair will likely have a brief rebound in the next few days. Such a move will see it rise to the next key resistance level at 1.2665.

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