GBP/USD surged by 1.35% on Monday, reclaiming the 1.2300 mark as markets reacted positively to US President Donald Trump’s unexpected pivot away from his proposed broad trade tariffs. Trump, who returned for a second term, has continued to pursue a policy of reviewing trade relations with key US allies. However, his earlier promise to impose tariffs of at least 20% on most imports, and a 65% tariff specifically on China, appears to be wavering.
In the UK, December’s Claimant Count Change is expected to rise sharply by 10.3K, a significant increase from the previous month’s 0.3K. Despite this, the ILO Unemployment Rate for the three months ending in November is forecast to remain stable at 4.3%.
On the US economic front, data releases remain subdued until Friday’s S&P Global Purchasing Managers Index (PMI). Market expectations are mixed, with the Services sector forecasted to show a decline, while the Manufacturing component is expected to register a slight increase.
GBP/USD Price Forecast: Following Monday’s rally, GBP/USD climbed above the 1.2300 level, with the near-term bullish momentum largely driven by a broader US Dollar weakness. However, the pair remains well below its 200-day and 50-day Exponential Moving Averages (EMAs), positioned around 1.2730 and 1.2540, respectively.
Last week, GBP/USD hit a 15-month low at 1.2100, marking the end of a four-month downtrend. The pair has closed in the red or flat for 13 out of the last 15 weeks, indicating persistent bearish pressure.
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