GBP/USD analysis on January 29, 2025
GBP/USD continues to trade near the 1.2450 mark, remaining under pressure due to increasing fears of a stagflationary scenario in the UK economy.
The main factors of pressure on the pound remain the slowdown in the UK labor market and persistent inflation. Employment in the country has been declining for the fourth month in a row, and in November the number of jobs created fell from 173.0 thousand to 36.0 thousand. At the same time, inflation remains above the Bank of England's target level (2.0%) and stands at 2.5% YoY according to December data./
Against this background, the markets are already pricing in the possibility of a reduction in the interest rate by the Bank of England at the next meeting on February 6 – by 25 bps, from 4.75% to 4.50%, which puts negative pressure on the British currency.
An additional risk factor remains the meeting of the US Federal Reserve, the results of which will be announced today at 21:00 (GMT+2). According to the CME FedWatch Tool, the probability of maintaining the rate at 4.50% is 99.5%, which supports the US dollar and strengthens its long-term upward trend. This creates additional pressure on the GBP/USD, increasing the likelihood of a further decline in the pair.
Another key driver of uncertainty remains expectations of new trade duties from Donald Trump, primarily against China, Mexico and Canada.
However, experts do not rule out that the United Kingdom and the EU may be included in the White House list, which will create additional pressure on the British currency. The first tariff innovations may come into force as early as February 1, which increases the demand for protective assets.
Technical analysis for GBP/USD for today
Long-term trend: downward
Against the background of the January drop, GBP/USD broke through the support level of 1.2300, but in recent days it has entered a corrective phase. In case of continued growth, the key resistance is the 1.2560 mark, from which sales may resume with a target of 1.2300.
Medium-term trend: change to an upward trend
Last week, the pair overcame the resistance zone of 1.2407–1.2379, which opened the way to the next range of 1.2687–1.2659. If the correction deepens, the support zone shifts to 1.2243–1.2215. If the quotes test this level, we will get a good opportunity to buy with a target of 1.2521 (weekly maximum).
The main forex indicators do not give unambiguous signals.
Trading Recommendations
, Short positions:
• Sale: from 1.2560
• Target: 1.2325
• Stop-Loss: 1.2625
, Long positions:
• Buy: above 1.2625
• Target: 1.2785
• Stop-Loss: 1.2560
In the coming days, the dynamics of GBP/USD will depend on the decisions of the Bank of England and the US Federal Reserve, as well as the geopolitical risks associated with the possible imposition of trade duties.