GBP/USD analysis on February 5, 2025
During Wednesday's Asian trading, GBP/USD did not show significant movements and remains near the 1.2469 mark, maintaining neutral dynamics. Despite the weakening of the US dollar as part of the corrective movement, the British currency has not yet been able to develop an upward momentum.
The key event of the day for the pound will be the publication of the January index of business activity in the UK services sector, expected at 11:30 (GMT+2). A slight increase in the indicator is projected from 51.1 to 51.2 points, which may support the strengthening of the composite index from 50.4 to 50.9 points. However, the situation in the industrial sector remains difficult: the volume of new orders is declining, the employment rate is falling, and the prospects for tax indexation and minimum wage adjustments in April pose additional risks. Despite the increase in the manufacturing PMI from S&P Global from 47.0 to 48.3 points, the indicator is still below the key mark of 50, signaling the continuation of the recession.
The US dollar index weakened after the announcement of a 30-day postponement of the introduction of 25% duties on imports from Canada and Mexico. The administration of Donald Trump explained this by the decision of the leaders of these countries to strengthen control over illegal migration. Market participants perceived this step as an element of negotiation tactics, which contradicts previous statements by the White House on the need to protect national businesses from foreign competition. Additional pressure on the USD was exerted by the weak JOLTS report, which showed a decrease in the number of open vacancies from 8,156 million to 7,600 million, the lowest since September.
Technical analysis for GBP/USD for today
According to John Murphy's technical analysis, the GBP/USD pair is correcting above the resistance of the descending channel, the dynamic boundaries of which are in the range of 1.2400–1.2100.
The indicators signal a possible weakening of the downward momentum.: The fast moving averages of the alligator indicator are moving closer to the signal line, and the Awesome Oscillator histogram is forming correction bars, approaching the buy zone.
Trading recommendations
— We will consider purchases after the breakdown and consolidation above 1.2520 with a target of 1.2690. The protective stop loss is 1.2430.
— Sales will become relevant when the 1.2420 support is broken and the price is fixed lower, with a target of 1.2250. The protective stop loss is 1.2500.