FX Report: 3rd - 6th March 2025
Buy Side Target
1.2760
Sell Side Target
1.2450
Current Price
1.2590
This week, GBP/USD has struggled to maintain its bullish momentum, currently trading below 1.26000, signalling the potential for a deeper pullback toward the 1.24500 region. Price action remains at a crossroads, with three possible scenarios unfolding: a continued consolidation between 1.25500 and 1.27000, an immediate move higher toward 1.27600, or a further decline toward key support at 1.24500.
- Bullish Scenario: As long as buyers remain in control, a test of 1.27600 is highly probable. A confirmed breakout above this level would open the door for further upside, with 1.28350 emerging as the next major resistance.
- Bearish Scenario: If price fails to reclaim 1.26000 and sustains below this level, bearish momentum could take over, leading to a move toward 1.24500. A break below this support would expose price to deeper selling pressure.
While short-term pullbacks remain a possibility, we remain open to both buying and selling opportunities, depending on whether price consolidates or establishes a clear directional move. As always, adapting to real-time price action and reacting to key levels will be critical in successfully navigating the market.
U.S. Economic Indicators:
- Non-farm Payrolls (NFP): The U.S. Bureau of Labor Statistics will release the February employment report on Friday, March 7. Markets anticipate an increase of approximately 155,000 jobs, with the unemployment rate expected to remain steady at 3.1%. Deviations from these expectations could significantly impact the U.S. dollar's strength.
- PMI Surveys: The Institute for Supply Management (ISM) will publish its Manufacturing PMI on Monday and Services PMI on Wednesday. These indicators provide insights into the health of the U.S. economy and can influence investor sentiment toward the USD.
Federal Reserve Communications:
- Several Federal Reserve officials, including Michelle Bowman, John Williams, and Raphael Bostic, are scheduled to speak this week. Their comments may offer clues about future monetary policy directions, potentially affecting the USD's trajectory.
Trade Policies and Political Events:
- President Trump's address to Congress on Tuesday, March 4, is expected to cover new tariffs on products from Canada, Mexico, and China. These trade policy announcements could influence market risk sentiment and, consequently, currency movements.
European Central Bank (ECB) Meeting:
- The ECB will announce its latest interest rate decision this week. Any unexpected policy changes could impact the euro, which, in turn, may affect the GBP/USD pair due to the interconnectedness of major currencies
Potential Scenarios for GBP/USD:
- Bullish Scenario: If U.S. economic data disappoints or Federal Reserve officials signal a dovish stance, the USD may weaken, allowing GBP/USD to climb toward the 1.2750 resistance level. A sustained break above this level could target 1.2835.
- Bearish Scenario: Conversely, stronger-than-expected U.S. economic indicators or hawkish Fed communications could strengthen the USD, leading GBP/USD to test support levels around 1.2450.
Traders should closely monitor these developments, as they will provide critical insights into the potential direction of the GBP/USD pair in the near term.
Last FX Report: 24th - 27th February 2025
Buy Side Target
1.2750
Sell Side Target
1.2200
Current Price
1.2647
Market Outcome
Neutral
As outlined in last week’s analysis, if GBP/USD failed to continue its upward movement above 1.27000, it would encounter reactions at the highlighted grey zone, and likely move sideways. These levels serve as key indicators of where price may pivot from. Price ended up consolidating and then proceeded to drop to the highlighted grey zone of 1.25500.
If the support zones are decisively broken, we can expect a downwards spiral towards the 1.24500 region, potentially acting as a short-term pullback. However, failure to sustain below these levels could lead to a continuation in bullishness and the potential for further upside momentum resumes.
Monitoring price action at these key areas will be crucial in determining the next move, whether it be a breakout continuation or a temporary retracement.
Successful traders recognize 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 the sideways movement, stalling, and bearishness inbound for GBPUSD, we capitalised on any buying and selling opportunities the market presented to us 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:
