GBP/USD remains stable above the mid-1.2900s, close to a multi-month high reached on Thursday. The pair is showing limited movement due to a slight uptick in the USD and mixed economic signals, while still on track for modest weekly gains.
During the Asian session, GBP/USD fluctuates around 1.2960, near early November peaks, with potential fluctuations dependent on USD dynamics. The Federal Reserve’s recent policy forecast indicates two 25 basis points rate cuts in 2025, amidst concerns about trade tariffs and geopolitical tensions impacting the Greenback.
Usd Index Outlook
The USD Index seeks to recover from recent lows, but the potential for significant growth remains uncertain. Market expectations suggest the Federal Reserve may reduce borrowing costs later in the year, whereas the Bank of England maintains a slower approach to cuts, supporting GBP/USD.
No major economic data is anticipated for Friday from either the UK or the US, suggesting limited resistance to a potential rise in spot prices. Consequently, the market appears poised for further gains heading into the third consecutive week of positive performance for GBP/USD.
What we see at the moment is a market that appears relatively steady, with the pound managing to hold its ground against the dollar. The fact that GBP/USD remains near levels last seen in early November suggests there’s still confidence behind sterling, despite mixed economic cues and a modest USD resurgence.
From Powell’s latest policy stance, it’s clear that the US central bank is leaning toward two rate reductions next year. That alone may not be the key driver in the short term, but when considered alongside trade uncertainties and geopolitical concerns, it creates conditions for restrained moves in the dollar. As a result, GBP/USD traders should remain alert to further changes in US sentiment, as any shift in expectations around rate cuts could quickly alter momentum.
Future Market Sentiment
For now, the dollar’s recovery efforts remain limited. The Index has struggled to regain lost ground, and with markets largely anticipating a softer Federal Reserve stance in the months ahead, the case for USD strength looks weaker without a fresh catalyst. Meanwhile, Bailey and his colleagues have not been in a rush to lower interest rates, which continues to lend support to the current GBP levels. The relative divergence in central bank policies is something that could keep downward pressure on the dollar in the coming weeks.
With no scheduled data releases from either the UK or the US at the end of this week, there’s little standing in the way of further moves higher. That said, traders should be mindful of potential shifts in sentiment as new economic assessments emerge. Should optimism around the pound persist, we could well see a third straight week of gains—a pattern that has been building momentum.
