Pound sterling price steadies near $1.245 ahead of UK GDP data, U.S. inflation release
Pound sterling steadies as BoE outlook and US CPI data shape market sentiment
The Pound sterling (GBP/USD) held firm near 1.2450 in Wednesday’s European session, maintaining its position ahead of the United Kingdom’s Q4 GDP data release on Thursday. Despite ongoing economic concerns, the British currency exhibited strength against major peers, except the Swiss franc.
However, Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann has warned that demand conditions in the UK are weaker than expected, adding uncertainty to the outlook.
Mann, who unexpectedly voted for a 50-basis point rate cut last week, clarified that her move aimed to signal appropriate financial conditions for the UK economy. The BoE, however, unanimously opted for a 25-basis point cut, maintaining a cautious approach to monetary easing. Investors are closely watching GDP figures, which are expected to show a 0.1% contraction in Q4 2024 after stagnating in the previous quarter. Year-on-year growth is forecast at 1.1%, a modest improvement from 0.9% in Q3.
GBP/USD price dynamics (Dec 2024 - Feb 2025) Source: TradingView.
U.S. inflation data and Fed stance support dollar strength
The US Dollar Index (DXY) trades slightly higher near 108.00, as investors await January’s US Consumer Price Index (CPI) data. Economists anticipate that core CPI growth will slow to 3.1% year-over-year, down from 3.2% in December, while headline inflation is expected to remain steady at 2.9%.
Federal Reserve Chair Jerome Powell reaffirmed that the Fed is in no rush to cut interest rates, citing resilient economic growth and persistent inflation. His comments, along with President Donald Trump’s decision to impose 25% tariffs on steel and aluminum imports, have strengthened the dollar while raising concerns about global trade.
Technical outlook: Key levels to watch
The GBP/USD pair faces resistance at the 50-day Exponential Moving Average (EMA) at 1.2484, limiting upside potential. The 14-day Relative Strength Index (RSI) remains in a neutral range, signaling a lack of strong momentum.
On the downside, key support levels are 1.2100 (January 13 low) and 1.2050 (October 2023 low). A break above 1.2607 (December 30 high) would signal renewed bullish strength, while a move below 1.2310 could accelerate losses.
On the basis of previously analyzed charts, GBP/USD remains range-bound, with further movement likely influenced by upcoming UK GDP and US CPI data.
