GBP/USD has stabilized near Monday's session closing levels around 1.2450 and is currently testing the 1.2400 support for a downward breakdown. Investors are closely monitoring developments related to the increase in import duties in the United States and expect new drivers for the movement of the GBP/USD pair.
Earlier, new tariffs of 25.0% on imports from Canada and Mexico were supposed to come into force on February 1. However, their introduction was postponed for a month due to preliminary agreements between the official representatives of the countries. At the same time, duties on goods from China in the amount of 10.0% remain in force, as no agreement has yet been reached between the administration of Donald Trump and Chinese leader Xi Jinping. Moreover, the issue of possible trade restrictions against the UK and the European Union remains open, which creates additional uncertainty for the British currency.
The key event of the week will be the meeting of the Bank of England, the results of which will be announced on Thursday at 14:00 (GMT+2). The interest rate is expected to decrease by 25 basis points to 4.50%, due to the risks of renewed inflationary pressure against the backdrop of US trade policy. Although consumer price growth in December was 2.5% year-on-year, below analysts' forecasts and close to the 2.0% target, the services sector, which the Bank of England considers as an indicator of core inflation, saw a sharp decline from 5.0% to 4.4The key event of the week will be the meeting of the Bank of England, the results of which will be announced on Thursday at 14:00 (GMT+2). The interest rate is expected to decrease by 25 basis points to 4.50%, due to the risks of renewed inflationary pressure against the backdrop of US trade policy. Although consumer price growth in December was 2.5% year-on-year, below analysts' forecasts and close to the 2.0% target, the services sector, which the Bank of England considers as an indicator of core inflation, saw a sharp decline from 5.0% to 4.4%. However, rising energy prices may trigger a new wave of inflation. In addition, the initiatives of Finance Minister Rachel Reeves to increase employer contributions to national insurance and indexation of the minimum wage increase business costs, which in the future may put pressure on consumer spending.
Friday's data on the US labor market (15:30 GMT+2) may have an Friday's data on the US labor market (15:30 GMT+2) may have an additional impact on the pair. It is expected that the number of new jobs in the non-agricultural sector will decrease from 256.0 thousand to 170.0 thousand, and the growth rate of average hourly wages will slow down from 3.9% to 3.8%. At the same time, the unemployment rate is projected to remain at 4.1%.
From the point of view of technical analysis, the main forex indicators give ambiguous signals. The Bollinger bands on the daily chart show an upward movement, but the range is narrowing, indicating uncertainty in the short term. The MACD turns downwards, forming a sell signal, while the Stochastic maintains a steady upward movement, which may indicate a further development of the bullish trend.
Trading recommendations
• It is recommended to consider sales after a confident breakdown of the 1.2350 level down, with a target of 1.2261. The stop loss is 1.2400.
• In the case of an upward rebound from 1.2350 and a subsequent breakdown of 1.2400, an increase to the 1.2500 area is possible, where purchases can be considered. The stop loss is 1.2350.