The GBP/USD pair has reached 1.2550 as trading volume remains low during the holiday week. The pair is trading near 1.2570, with a lackluster performance in the market. The US Dollar Index DXY is stable around 108.15, showing little movement.
Fed’s Influence on the Greenback
The Federal Reserve’s expected gradual interest rate cuts are weighing on the US dollar. Fed officials have indicated a more cautious approach to rate cuts, influenced by the slow disinflation process and the uncertainties surrounding President – elect Donald Trump’s policies. The latest Fed projections suggest that the federal funds rate could reach 3.9% by the end of 2025, which is less than previously expected.
Economic Calendar and Market Impact
The release of Initial Jobless Claims on Thursday is expected to show a slight decline to 218K. This could potentially cause some volatility for the US dollar. In addition, the Non – farm Payrolls figures for December, due in early January, will be closely watched. The labor market plays a crucial role in the Fed’s decision – making process.
Technical Outlook for GBP/USD
The GBP/USD pair is facing significant downward pressure. The Relative strength index (RSI) has dipped below the 40.00 mark, indicating potential further downward momentum. The Moving Average Convergence Divergence (MACD) shows red bars, suggesting a strong bearish presence. The next support level for GBP/USD is around 1.2300. On the upside, if the pair can regain the 1.2600 mark, it could be a sign of recovery. This level will be crucial for any potential upward movement.
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