GBP/USD rallies on rate cut hopes, NFP Friday in the barrel


  • GBP/USD found room to move on the high end on Thursday.
  • BoE Governor Bailey gave a head nod to further rate cuts in 2025.
  • Market sentiment is tilting into the risk-on side ahead of Friday’s US NFP jobs print.

GBP/USD climbed on Tuesday, bolstered by Bank of England (BoE) Governor Andrew Bailey tipping his hand and revealing a path forward to further rate cuts in 2025. Broad-market investor sentiment remains on the high side, although a fresh round of key US Nonfarm Payrolls (NFM) jobs figures are looming just ahead on Friday.

Four rate cuts from the BoE in 2025, maybe

BoE Governor Bailey noted earlier Thursday that he sees around four rate cuts in 2025, which briefly sent the Pound stumbling during the London market session, but GBP traders quickly recovered their footing and pushed Cable back into the high end for the day. The head of the UK central bank reiterated cautious talking points and reaffirmed a data-dependent stance, helping to keep market expectations on-balance that the BoE will leave rates unchanged on December 19.

Initial Jobless Claims for the week ended November 29 rose to a six-week high of 224K, missing the expected print of 215K and stepping above the previous week’s revised 215K. Challenger Job Cuts in November also rose to 57.727K, but the batch of mid-tier labor data pales in comparison to Friday’s upcoming NFP print. Investors are expecting November’s NFP net jobs additions to rebound to 200K after the previous month’s stumble to 12K. October’s shockingly low print was attributed to layoffs from hurricanes and labor strikes, and investors are hoping for a healthy rebound in job gains.

GBP/USD price forecast

The GBP/USD daily chart shows the pair trading at 1.2758, attempting to recover after a significant downtrend that began in late July. The pair peaked near 1.3140 in early September, forming a notable resistance level, before selling off sharply to a low around 1.2520 in early November. This bearish momentum was fueled by a breakdown below the 200-day EMA, currently positioned at 1.2836, signaling a shift in sentiment. However, recent price action reveals a rebound, as GBP/USD managed to reclaim the 1.2700 handle and is challenging key technical zones.

The 50-day EMA at 1.2884 and the 200-day EMA overhead act as dynamic resistance, with the pair needing to decisively breach these levels to resume a sustainable bullish trend. On the upside, the 1.2900 area is a critical hurdle, aligning closely with the October swing high. If GBP/USD clears this zone, it may signal a medium-term trend reversal and open the door for a retest of September's highs near 1.3140. Conversely, failure to maintain recent gains could see the pair revisiting the 1.2600 support or even the recent lows near 1.2520.

The MACD indicator underscores this pivotal moment, with the MACD line crossing above the signal line, suggesting growing bullish momentum. However, the histogram remains subdued, pointing to a lack of conviction. Traders should monitor whether this recovery gathers pace, especially with upcoming fundamental catalysts likely to shape the next directional move. A sustained close above the 200-day EMA is critical for bulls, while bears would aim to defend the 1.2900 resistance and push the pair back below 1.2700.

GBP/USD daily chart

Pound Sterling FAQs

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD declines toward 1.0450 on USD recovery

EUR/USD declines toward 1.0450 on USD recovery

EUR/USD struggles to gain traction and declines toward 1.0450 on Tuesday despite the upbeat ZEW Survey - Economic Sentiment data for Germany and the Eurozone. Rising US Treasury bond yields support the US Dollar and weigh on the pair.  

EUR/USD News
GBP/USD struggles to hold above1.2600

GBP/USD struggles to hold above1.2600

GBP/USD stays under modest bearish pressure and trades below 1.2600 on Tuesday. Earlier in the day, the pair edged higher with the initial reaction to the UK labor market data, which showed that the Unemployment Rate held steady at 4.4% in the three months to December.

GBP/USD News
Gold gathers bullish momentum, rises to $2,920 area

Gold gathers bullish momentum, rises to $2,920 area

Gold builds on Monday's modest gains and rises to the $2,920 area on Tuesday. Markets brace for headlines to come in from Saudi Arabia, where US and Russian officials are meeting for peace talks. Meanwhile, rising US T-bond yields could limit XAU/USD's upside.

Gold News
Why Solana, XRP, Dogecoin and BNB are crashing?

Why Solana, XRP, Dogecoin and BNB are crashing?

Solana (SOL), XRP, Dogecoin (DOGE) and Binance Coin (BNB) decline on Tuesday. Top altcoins ranked by market capitalization are in a downward trend, even though Bitcoin (BTC) continues to consolidate around the $95,000 level. 

Read more
Rates down under

Rates down under

Today all Australian eyes were on the Reserve Bank of Australia, and rates were cut as expected. RBA Michele Bullock said higher interest rates had been working as expected, slowing economic activity and curbing inflation, but warned that Tuesday’s first rate cut since 2020 was not the start of a series of reductions.

Read more
The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025