Pound sterling price retreats as U.S. dollar rebounds ahead of U.S. PMI data
GBP/USD price chart highlighting resistance at 1.2767 and support at 1.2333
The Pound sterling (GBP) declined against the US Dollar (USD) on Friday, pulling back from a two-month high of 1.2680 amid renewed greenback strength. Investors await the S&P Global U.S. PMI data for February, which could provide further insights into economic activity and Federal Reserve policy expectations.
The US Dollar Index (DXY) recovered to 106.65, bouncing off its year-to-date low of 106.30 recorded on Thursday. The rebound comes despite concerns that U.S. President Donald Trump’s tariff strategy could impact global trade. Investors have reassessed Trump’s 25% tariffs on aluminum and steel, as well as the 10% levy on Chinese imports, viewing them as potential negotiation tactics rather than immediate policy shifts.
Meanwhile, Federal Reserve officials continue to support a restrictive monetary policy stance. On Thursday, Fed Governor Adriana Kugler emphasized that the central bank should maintain interest rates at their current levels for the foreseeable future due to uncertainty surrounding economic policies.
GBP/USD price dynamics (January 2025 - February 2025) Source: TradingView.
UK retail sales beat expectations but fail to boost GBP
The Office for National Statistics (ONS) reported that UK Retail Sales surged 1.7% in January, significantly outperforming market expectations of 0.3%. On a year-over-year basis, retail sales increased 1%, exceeding the 0.6% forecast but remaining lower than the 2.8% growth recorded in December.
Despite strong consumer spending data, the British Pound failed to sustain gains, as Bank of England (BoE) Governor Andrew Bailey warned about sluggish economic growth. The BoE’s latest policy statement halved GDP growth forecasts to 0.75% for the year, tempering expectations of a sustained economic rebound.
Technical outlook: GBP/USD holds above $1.262 support
Technically, the GBP/USD pair remains above the 38.2% Fibonacci retracement level from its September high to January low, currently at 1.2620. The 14-day RSI remains above 60.00, indicating continued bullish momentum. Key support lies at 1.2333, while a breakout above 1.2767 (50% Fibonacci retracement) could reinforce further upside potential.
Our last analysis highlighted the GBP/USD rally above 1.2600, driven by strong UK economic data and weak USD sentiment. The recent pullback suggests profit-taking ahead of key U.S. economic releases.
