|

GBP/USD builds a cushion around 1.2040, volatility looks persistent ahead of US GDP

  • GBP/USD is gauging an intermediate cushion around 1.2040, however, the overall market mood is still negative.
  • Fed policymakers are reiterating higher interest rates for longer to achieve the 2% inflation target.
  • The annualized US GDP Q4 data is seen stable at 2.9%.

The GBP/USD pair has sensed a pause in the downside momentum after dropping to near 1.2040 in the early Asian session. It would be premature to consider a loss in the downside momentum for the Cable as higher volatility might stay ahead of the release of the preliminary United States Gross Domestic Product (GDP) data for the fourth quarter of CY2022. The annualized economic data is seen stable at 2.9%

The Cable witnessed an intense sell-off in the late New York session after the release of the hawkish Federal Open Market Committee (FOMC) minutes. Federal Reserve (Fed) chair Jerome Powell and his mates are still reiterating higher interest rates for a longer period to drag the Consumer Price Index (CPI) to a near 2% target.

Fed policymakers are worried that China’s reopening after the rollback of lockdown curbs and ongoing Russia’s invasion of Ukraine advocate upside risks in inflation. Domestically, a labor shortage could propel a higher wage price index ahead.

Meanwhile, S&P500 futures have shown a recovery in the Asian session. The 500-US stocks basket futures have recovered their entire losses demonstrated on Wednesday. A sense of optimism has been observed in the overall risk aversion theme.

The optimism could fade as President Joe Biden said it was a "big mistake" for Russian President Vladimir Putin to temporarily suspend Russia's participation in the last remaining nuclear arms treaty between the two countries. Earlier, US Biden announced, “Russia was suspending its participation in the New START treaty, which implements caps on the number of nuclear weapons deployed by each country and inspections of nuclear sites,” as reported by ABC News.

The Pound Sterling looks like it is struggling again as the recovery in manufacturing activities is insufficient to avoid the recession ahead. The preliminary United Kingdom manufacturing activities remained upbeat at 49.2, however, a figure below 50.0 is considered a contraction. UK households are struggling to address their usual demand due to higher food inflation, which is impacting their confidence in the economic prospects.

GBP/USD

Overview
Today last price1.2049
Today Daily Change-0.0057
Today Daily Change %-0.47
Today daily open1.2106
 
Trends
Daily SMA201.2169
Daily SMA501.2164
Daily SMA1001.1916
Daily SMA2001.1937
 
Levels
Previous Daily High1.2148
Previous Daily Low1.1986
Previous Weekly High1.227
Previous Weekly Low1.1915
Previous Monthly High1.2448
Previous Monthly Low1.1841
Daily Fibonacci 38.2%1.2086
Daily Fibonacci 61.8%1.2048
Daily Pivot Point S11.2012
Daily Pivot Point S21.1918
Daily Pivot Point S31.185
Daily Pivot Point R11.2174
Daily Pivot Point R21.2242
Daily Pivot Point R31.2336

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

More from Sagar Dua
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD edges above 1.1750 due to ECB-Fed policy divergence

EUR/USD has recovered its recent losses registered in the previous session, trading around 1.1760 during the Asian hours on Friday. Traders will likely observe Germany’s Manufacturing Purchasing Managers’ Index data later in the day.

GBP/USD gathers strength above 1.3450 on Fed rate cut bets, BoE's gradual policy path

The GBP/USD pair gathers strength to around 1.3480 during the early Asian session on Friday. Expectations of the US Federal Reserve rate cuts this year weigh on the US Dollar against the Pound Sterling. Philadelphia Fed President Anna Paulson is set to speak later on the weekend. 

Gold climbs to near $4,350 on Fed rate cut bets, geopolitical risks

Gold price rises to near $4,345 during the early Asian session on Friday. Gold finished 2025 with a significant rally, achieving an annual gain of around 65%, its biggest annual gain since 1979. The rally of the precious metal is bolstered by the prospect of further US interest rate cuts in 2026 and safe-haven flows.

Bitcoin, Ethereum and Ripple enter the New Year with breakout hopes

Bitcoin, Ethereum, and Ripple entered the new year trading at key technical levels on Friday, as traders seek fresh directional cues in January. With BTC locked in a tight range, ETH is approaching its 50-day Exponential Moving Average, while XRP is nearing resistance. A clear breakout across these top three cryptocurrencies could help define market momentum in the opening weeks of the year.

Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Crypto market outlook for 2026

Year 2025 was volatile, as crypto often is.  Among positive catalysts were favourable regulatory changes in the U.S., rise of Digital Asset Treasuries (DAT), adoption of AI and tokenization of Real-World-Assets (RWA).