GBPUSD Forecast: 2025 Inflation Concerns Dampen Dovish Drive
GBP/USD Forecast: This week brings notable UK economic indicators, including GDP, inflation, and retail sales, alongside the key catalyst: U.S. CPI data. These events are set to shed light on the pound’s struggles with pressured lows against the dollar.
Share this:
Article Outline
- Key Events: UK Economic Indicators, US CPI, and Fed Rate Expectations
- Technical Analysis: GBPUSD 3 Day Time Frame
- Technical Analysis (TA) Tip: RSI zones and Fibonacci Levels
Source: CME Fed Watch Tool
With inflation concerns rising in 2025, the likelihood of a rate hold or even a rate hike looms large. The final Non-Farm Payroll result of 2024 exceeded expectations with a strong addition of 256,000 jobs, boosting Fed pause expectations to 97% while introducing the possibility of rate hikes in the year ahead.
Concerns over inflation, combined with uncertainty surrounding upcoming Trump policies, have driven the U.S. Dollar Index toward the 110-mark, exerting pressure on global currencies. This has led to cautious monetary stances from central banks and pushed currencies like the euro near parity and the pound toward October 2023 lows, sinking further into its 15-year extended consolidation range.
In addition to the expected volatility from this week’s U.S. CPI report on Wednesday, UK inflation, GDP, and Retail sales data are set to heighten market fluctuations for the pound. UK inflation expectations have stabilized at 8-months of 2.6%, while monthly GDP forecasts range from -0.1% to 0.2%, marking a potential 3-month high.
Pound bulls are closely monitoring these metrics, hoping for improvements to support a potential recovery against the dollar.
Technical Analysis: Quantifying Uncertainties
GBPUSD Forecast: 3-Day Time Frame – Log Scale
Source: Trading view
Breaking below the 2024 low at 1.2330, the GBP/USD accelerated its decline toward the October 2023 low at 1.2030. Extreme conditions on the chart highlight the significance of the next support levels, particularly the 1.272 Fibonacci extension, drawn from the July 2023 high (1.3125), October 2023 low (1.2030), and September 2024 high (1.3434).
These levels align with previously observed oversold conditions on the Relative Strength Index (RSI) in October 2023 and September 2022. If the current support holds, a potential reversal could push the pair back toward the resistance at 1.2770, coinciding with the upper border of the 15-year consolidation range.
However, this would require a decisive close above the 2024 lows at 1.2330. Should bearish pressures continue below the critical 1.20 level, further declines could target the 1.5 and 1.618 Fibonacci extension levels, which align with the 1.18 and 1.1670 zones, respectively.
Written by Razan Hilal, CMT
Follow on X: @RH_waves
You Tube: Forex.com
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
US Dollar Technical Outlook: DXY Bulls Meet Resistance at Yearly Highs 10 1 2026
The U.S. Dollar has held firm despite fading Fed hike bets, but Friday’s payrolls could test the rally’s staying power.
Tankan Backs BOJ Tightening, but Yen Rate Expectations Ease
Japan’s Tankan supports further BOJ tightening, although softer rate expectations could limit support for the Japanese yen.
AUD/USD hammered by US yields and fading RBA hike bets
US yields, dollar strength and fading RBA hike bets have combined to drive AUD/USD to fresh multi-month lows. The macro and technical bias remains bearish, although history suggests parts of the move are now reaching unusually stretched levels.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.