The GBPUSD pair has been volatile, rebounding from a November 22 low of 1.24866 but struggling to break the 50-period EMA, with key resistance at 1.27492 and potential targets at 1.29061, 1.30691, and 1.34337. Downside risks remain at 1.26165, 1.24866, and 1.23346. Sterling gains support from the Bank of England's cautious rate-cut strategy and the OECD's forecast for UK inflation above 2%, boosting its appeal against the Euro and Dollar. Upcoming economic events, including US Unemployment Claims and Nonfarm Employment Change, will further guide market moves.
Overview
The GBPUSD pair has been volatile, rebounding from a November 22 low of 1.24866 but struggling to break the 50-period EMA, with key resistance at 1.27492 and potential targets at 1.29061, 1.30691, and 1.34337. Downside risks remain at 1.26165, 1.24866, and 1.23346. Sterling gains support from the Bank of England's cautious rate-cut strategy and the OECD's forecast for UK inflation above 2%, boosting its appeal against the Euro and Dollar. Upcoming economic events, including US Unemployment Claims and Nonfarm Employment Change, will further guide market moves.
Key Economic Events
Thursday 15:30 (GMT+2) - USA: Unemployment Claims (USD)
Friday 15:30 (GMT+2) - Canada: Employment Change (CAD)
Friday 15:30 (GMT+2) - USA: Nonfarm Employment Change (USD)
Technical Analysis
Since peaking at 1.34337 on September 26, the Pound Sterling has followed a bearish trend. The price dropped below the 50-period Exponential Moving Average (EMA) and formed a failure swing reversal pattern, intensifying the downward momentum. Additionally, both the Momentum Oscillator and the Relative Strength Index (RSI) fell below their respective baselines of 100 and 50.
By November 22, the GBPUSD pair had bounced off its low at 1.24866, targeting the key resistance level of 1.27492. This rebound is supported by the Momentum Oscillator and the RSI, which have both climbed above their respective baselines. A decisive break above the 1.27492 resistance level could pave the way for a rally. However, prices have yet to rise above the 50-period EMA, which remains a critical point to watch for confirming a sustained upward trend.
Potential Upside Targets
Should the bulls take market control, traders may direct their attention toward the four potential resistance levels below:
1.27492: The initial resistance is 1.27492, which represents a swing high from November 29.
1.29061: The second price target is identified at 1.29061, corresponding to the weekly resistance, R2, calculated using the standard Pivot Points methodology.
1.30691: The third target is established at 1.30691, aligning with the 61.8% Fibonacci Retracement drawn from the high point, 1.34337, to the low point, 1.24866.
1.34337: An additional price target is estimated at 1.34337, which corresponds to the high marked on September 26.
Potential Downside Targets
Should the sellers maintain market control, traders may consider the four potential support levels listed below:
1.26165: The first level of support is determined at 1.26165, representing a swing low from December 2.
1.24866: The second support level is identified at 1.24866, reflecting a daily low marked on November 22.
1.23346: The third support level is seen at 1.23346, corresponding to the weekly support, S3, calculated using the standard Pivot Points methodology.
1.22045: An additional downward target is observed at 1.22045, corresponding to the 423.6% Fibonacci Extension drawn from the swing low, 1.28433 to the swing high, 1.30466.
Fundamentals
The Bank of England's cautious approach to cutting interest rates will support the Pound Sterling against the Euro and Dollar. Governor Andrew Bailey confirmed expectations for only four rate cuts in 2025, aligning with the Organisation for Economic Co-operation and Development (OECD) outlook for UK inflation to remain above 2%. The OECD forecasts the Bank of England's base rate to plateau at 3.5% by 2026, while UK rates will stay higher than those in the Eurozone and the US. This strategy is expected to keep Sterling as one of the best-performing major currencies, maintaining its favorable carry position compared to other currencies.
Conclusion
In summary, the GBPUSD pair remains at a pivotal point, with its rebound from recent lows yet to confirm a sustained upward trend amid resistance at the 50-period EMA. Sterling's strength is underpinned by supportive fundamentals, including the Bank of England's cautious rate-cut strategy and higher UK inflation expectations, making it competitive against major currencies. Traders will look to upcoming economic data, such as US Unemployment Claims and Nonfarm Employment Change, for further direction in this volatile market environment.