FX Report: 10th - 13th February 2025
Buy Side Target
1.2750
Sell Side Target
1.2300
Current Price
1.2390
This week, GBP/USD has struggled to sustain momentum above 1.25500, preventing a direct move toward the 1.27500 region. Instead, price action has shifted into a period of sideways movement and consolidation, signalling a phase where patience and caution are essential as we await clearer market direction.
Looking ahead, if sellers maintain control, there is a strong probability of price declining toward the 1.23000 level. A confirmed break below this zone would open the door for further downside, with our key buying area around 1.22000 coming into focus.
Conversely, if buyers regain dominance, a push toward 1.27500 highly remains on the table. However, for this bullish scenario to materialise, price must first break and sustain above the highlighted resistance zones. These levels could serve as pivotal reaction points, and any sharp rejection from these areas may reinforce bearish momentum, increasing the likelihood of a move toward 1.22000.
Conversely, a strong breakout and sustained move above these resistance zones could indicate renewed bullish momentum, paving the way for price to challenge 1.27500. A decisive break above this level may open the door for further upside, signalling a continuation of the broader bullish trend.
These key levels serve as critical markers for potential market movements and will remain our focal points in the days ahead. As always, maintaining a disciplined approach and adapting to price action will be essential in navigating the current market structure.
UK Economic Developments
- GDP & Business Investment
- The UK will release its Q4 Preliminary GDP data, a key indicator of economic growth.
- Expectations are mixed, with potential stagnation due to high inflation and weak consumer spending in late 2024.
- Business Investment (Q4 Preliminary) will also be published, revealing how UK firms are deploying capital. A strong reading could boost GBP, while weak investment may signal economic slowdown
- Trade Balance
- The UK's December Trade Balance report will show the difference between exports and imports.
- A larger trade deficit (more imports than exports) could weaken GBP, while a smaller deficit or surplus could be GBP-positive.
- Industrial & Manufacturing Production
- December Manufacturing & Industrial Production figures will gauge output levels in key UK sectors.
- Any contraction in production could reinforce recession fears and put pressure on GBP.
US Economic Developments
- US Inflation (Tuesday, Feb 13)
- The January Consumer Price Index (CPI) is one of the biggest market movers this week.
- A higher-than-expected inflation print could boost the USD as it increases expectations for the Fed to maintain higher interest rates for longer.
- If CPI cools, it may signal potential rate cuts later in 2025, weakening the USD.
- US Retail Sales (Thursday, Feb 15)
- January Retail Sales data will show how strong consumer spending remains after the holiday season.
- A strong reading could support USD, while a weak figure could increase fears of slowing growth.
- Federal Reserve Commentary
- Multiple Fed officials are scheduled to speak this week.
- If they maintain a hawkish tone and reinforce expectations for higher rates, it could strengthen USD.
- Any dovish signals (hints at rate cuts) could weigh on the dollar.
Trading Implications for GBP/USD
- If UK data surprises to the upside while US inflation disappoints, GBP/USD could see a bullish rebound.
- However, a strong US CPI and weak UK growth figures could push GBP/USD lower.
Last FX Report: 3rd - 6th February 2025
Buy Side Target
1.2750
Sell Side Target
1.2300
Current Price
1.2390
Market Outcome
Neutral
As outlined in last week’s analysis, GBP/USD failed to break above 1.25500, putting our 1.27500 target on hold. Instead, price action has moved sideways, seeking what we refer to as market value, before determining its next directional move.
As previously stated, the inability to break and hold above 1.24500 or 1.25500 increases the likelihood of continued consolidation before a potential move lower or higher, until a confirmed breakout provides clear market direction.
Successful traders recognise the significance of these key levels and understand when to remain patient versus when to act. Discipline, adaptability, and strategic decision-making are what separate great traders from the rest.
For now, we stay vigilant, monitor price behaviour around these critical zones, and wait for the market to reveal its next move.
Identifying that the market may consolidate, for GBPUSD, we capitalised on both buying and selling opportunities the market presented using our proprietary tools and strategy.
*Contracts for difference (CFDs) are complicated financial contracts based on leverage, which can possibly result in huge fluctuations in profits or losses. Therefore, it is essential to study and understand CFDs thoroughly before embarking on investment. You should at the same time stay conscious and ready yourself for the potential risk of losing a part or your whole capital. This outlook is non-financial advice, you should consult with your personal financial advisor before making any investment decisions.
How we traded this outlook:
