GBP/USD has fallen to its lowest level since November 2023. | 13 Enero 2025

GBPUSD:

The GBP/USD pair is entering a bearish consolidation phase at the start of the new week near the 1.2200 mark during the Asian session. Moreover, the fundamental backdrop seems to suggest that the path of least resistance for spot prices remains on the downside.

Furthermore, the recent rise in UK government bond yields has heightened concerns over the UK's financial health, which is a factor undermining the British Pound and further confirming the negative outlook for the GBP/USD pair against a bullish US Dollar (USD) backdrop.

The US Dollar Index (DXY) hit a two-year high on Friday in response to good US jobs data. The Non-Farm Payrolls (NFP) report showed that the US economy added 256,000 jobs in December, beating even the most optimistic estimates, while the unemployment rate unexpectedly fell to 4.1%, reinforcing expectations of a tight Federal Reserve (Fed) stance.

Investors are convinced that the Fed will pause the rate-cutting cycle at its meeting later this month and are also assessing the possibility of an interest rate hike this year. The outlook remains favourable for US Treasury yields, which, along with risk-off momentum, supports the prospects for further USD strength and additional losses for GBP/USD.

That said, in the absence of any meaningful economic data from the UK and the US, GBP/USD looks vulnerable to further weakness towards below 1.2100 or the November 2023 low.

Trading recommendation: Trading mainly with Sell orders from the current price level.

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