Traders of the GBP/USD will have to decide on their personal perspectives while judging technical, fundamental and behavioral sentiment this coming week.
On the 6th of January the GBP/USD was at nearly 1.35680. Last Tuesday the GBP/USD was around 1.34955 as the high for the week, but the currency pair closed close to 1.33764 going into this weekend. The incremental lower action since the highs made in the first week of January do correlate to the broad Forex markets.
The highs seen on the 6th of January touched values last seen in September of 2025, but remained far below the apex highs attained then and in the month of June when the 1.37000 value was penetrated. However, the recent lower price action in the GBP/USD is still within the lower middle crux of the currency pair’s value via a one month chart. And near higher elements when a GBP/USD three month technical glance is taken.
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Recent Downturn and Sentiment
The U.K still is producing rather lackluster economic data, this Tuesday employment data will come from Britain, and inflation via CPI statistics will be published on Wednesday. Yet, U.S data and influence via USD centric action remains the dominant force with the GBP. U.S economic data via its inflation statistics were rather mixed, but the most recent releases (October and November data were released last week at the same time due to the U.S government shutdown a couple of months ago) showed inflation remained rather tame – this if you looked at the November results.
However, this point can be argued and certainly did not impact the USD with weakness. In fact the USD got stronger and the downwards price of action of the GBP/USD and the EUR/USD reflected this trend. It can be said that more risk adverse attitudes in the financial markets caused the selloff of the GBP/USD, which picked up moment from late Tuesday and into the remainder of the week. The close of nearly 1.33764 is traversing territory last seen around the 19th of December.
U.S Fed Outlook and Global Risks Influences
The U.S Federal Reserve is suffering from a rather public debate in its FOMC about the direction of interest rates. Fed Chairman Jerome Powell and President Trump are engaged in a rather unprecedented tussle regarding policy.
- The firefight President Trump is trying to start with the Fed may have financial institutions rather nervous about short and near-term effects on the USD.
- The Fed will conduct its next FOMC meeting the end of January, and not many analysts are predicting a rate cut in this upcoming meeting.
- Also the threat of escalating tension in the Middle East due to the Iranian situation has likely increased nervousness with financial institutions, this as they look forward and deal with near-term commercial cash positions.
GBP/USD Weekly Outlook:
Speculative price range for GBP/USD is 1.32950 to 1.35020
Day traders and financial institutions may both feel that the GBP/USD is oversold at its current levels, but nervous sentiment early this coming week should be watched. Depending on news developments the USD could see rather volatile price action due to rhetoric which could influence sentiment rather dramatically in the near-term. If global conditions remain tranquil this could help ease tensions among large institutions, but this doesn’t feel likely. This weekend has produced loud noise regarding threats of more tariffs against Europe due to political diatribes from President Trump about Greenland once again, yes, believe it or not. Thus, large traders are getting hit from many directions regarding noise in the markets.
Also it should be remembered that President Trump is scheduled to speak in the middle of this week at the Davos summit in Switzerland. Trump could engage in a calm tranquil policy speech, or he could easily veer off into rhetoric which makes financial markets nervous. If nervousness wins the day, this could create downwards trajectory for the GBP/USD. Although the GBP/USD may be thought of as being oversold for the moment, looking for sustained upside this coming week may be difficult. Short, quick hitting wagers are recommended for day traders depending on the their perspectives and sentiment shifts which are a certainty.
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