GBP/USD weak near 1.2500 amid Bank of England's dovish 2025 rate hike | 02 Enero 2025

GBPUSD:

The EUR/USD exchange rate has been declining for the past four consecutive days, trading near 1.0350 during Asian hours on Thursday. The euro is facing challenges as the European Central Bank (ECB) maintains its dovish interest rate policy guidance for the current year.

The ECB cut the deposit rate by 100 basis points (bps) to 3% in 2024 and is expected to cut it further to 2%, considered a neutral rate, by the end of June 2025. This suggests that the central bank is likely to cut key borrowing rates by 25 bps at each meeting in the first half of this year.

On Wednesday, ECB President Christine Lagarde stated that the central bank aims to meet its inflation target of 2 per cent by 2025, adding that significant progress has been made in reducing inflation and that the target is expected to be reached in 2025, as anticipated and in line with the strategy. She added: 'Of course, we will continue our efforts to ensure that inflation stabilises sustainably at our medium-term target of 2 per cent.'

The Federal Reserve may adopt a more cautious stance on further rate cuts in 2025, signalling a change in its monetary policy. This change reflects the uncertainty associated with potential policy adjustments in light of the perceived economic strategies of the incoming Trump administration.

Trading recommendation: We follow the level of 1.2550, when fixing above it we consider Buy positions, when rebounding we consider Sell positions.

Fund your account with cryptocurrency and you will receive up to 10% in balance on your first deposit. The additional funds will be used for trading, increasing trading volumes and helping you withstand drawdowns.