GBP/USD faces bearish pressure, dropping to 1.2535 post-Powell's hawkish remarks and strong US data. Watch for movements towards 1.2400, with key resistance at 1.2525 amid economic divergences.

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.2400.
• Add a stop loss at 1.2595.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.2525 and a take-profit at 1.2625.
• Add a stop-loss at 1.2450.

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The GBP/USD exchange rate continued plunging after a hawkish statement by Jerome Powell and strong US economic numbers. The pair slipped to 1.2535 on Monday, its lowest point since December last year.

US and UK divergence

There are signs that the UK and US economies have diverged in the past few months. While the UK narrowly avoided a recession, the US is one of the fastest-growing economies in the developed world. Its manufacturing and services sectors are doing well while the labor market is still tight.

This view was confirmed by the OECD, which noted that the US expanded by 2.5% while the UK grew by 0.3% in 2024. The organization, which is a club of rich countries, estimates that the US will grow by 2.1% this year while the UK will expand by 0.7%.

The strength of the US economy was confirmed on Friday when the government published strong jobs numbers. According to the Labor Department, the economy created over 350k jobs in January while wage growth accelerated.

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