US Dollar Forecast: GBP/USD Attempts to Trade Back Above 50-Day SMA
US Dollar Outlook: GBP/USD
GBP/USD attempts to trade back above the 50-Day SMA (1.2676) following the four-day rally from last week, but the exchange rate may track the flattening slope in the moving average should it struggle to test the monthly high (1.2772).
US Dollar Forecast: GBP/USD Attempts to Trade Back Above 50-Day SMA
GBP/USD retraces the decline following the stronger-than-expected US Consumer Price Index (CPI) after failing to take out the monthly low (1.2518), and the exchange rate may stage a further advance should it push above the opening range for February.
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
Nevertheless, the update to the US Personal Consumption Expenditure (PCE) Price Index may sway GBP/USD as the Federal Reserve endorses a data dependent approach in managing monetary policy, and another downtick in the core PCE, the Fed’s preferred gauge for inflation, may keep GBP/USD afloat as the index is expected to narrow to 2.8% in January from 2.9% per annum the month prior.
US Economic Calendar
Evidence of slowing price growth may push the Federal Open Market Committee (FOMC) to gradually adjust the forward guidance for monetary policy as officials forecast lower interest rates for 2024, but a higher-than-expected core PCE print may drag on GBP/USD as it puts pressure on the FOMC to keep US interest rates higher for longer.
With that said, GBP/USD may further retrace the decline from the monthly high (1.2772) as it attempts to trade above the 50-Day SMA (1.2676), but the exchange rate may consolidate over the coming days if it struggles to hold above the moving average.
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Strategist; GBP/USD on TradingView
- GBP/USD may further retrace the decline from the monthly high (1.2772) as it attempts to trade above the 50-Day SMA (1.2676), with a breach above the January high (1.2787) raising the scope for a test of the December high (1.2828).
- A break/close above the 1.2760 (61.8% Fibonacci retracement) to 1.2830 (23.6% Fibonacci retracement) opens up 1.2900 (23.6% Fibonacci retracement), but GBP/USD may track the flattening slope in the moving average if it struggles to retrace the decline from the monthly high (1.2772).
- Lack of momentum to hold above 1.2630 (38.2% Fibonacci retracement) may push GBP/USD towards the monthly low (1.2518), with a breach below the December low (1.2500) bringing 1.2470 (50% Fibonacci retracement) on the radar.
Additional Market Outlooks
US Dollar Forecast: USD/CAD Coils Above 50-Day SMA
US Dollar Forecast: USD/JPY Rate Eyes Monthly High
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2025