Dollar weakening serves as a tailwind for GBP/USD | 05 Febrero 2025

GBPUSD:

The GBP/USD pair is unable to capitalize on the strong gains recorded over the past two days and consolidated near the weekly high, below the psychological 1.2500 mark during Wednesday's Asian session. Nevertheless, the downside remains tempered amid some follow-through selling in the US Dollar (USD).

Meanwhile, global risk sentiment continues to be supported by optimism driven by US President Donald Trump's decision to postpone the imposition of tariffs on Canadian and Mexican imports, which helped ease fears of a trade war and its impact on the global economy. This is evidenced by the overall positive tone in stock markets, which is seen as another factor undermining the safe-haven dollar and acting as a tailwind for GBP/USD.

However, investors remain concerned about the potential impact of trade tensions between the US and China, the world's two leading economies. This, along with the Fed's hawkish outlook, is helping to limit the US Dollar's decline and is holding back the GBP/USD pair's gains. Traders also seem reluctant and may prefer to head to the sidelines ahead of the central bank's key event, the Bank of England (BoE) policy meeting on Thursday.

Trading recommendation: Watch the level of 1.2500, if consolidated above consider Buy positions, if rebounded consider Sell positions.

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