empty
10.01.2025 04:58 PM
GBP going through dire straits

The GBP/USD pair has been in a steep downtrend this week, dropping more than 300 points in just a few days. Yesterday, GBP/USD bears pushed the price to a 14-month low of 1.2237, marking the first test of 1.22 since November 2023. Notably, the instrument sank sharply even though the US dollar index weakened, indicating that GBP/USD's downward movement is driven not only by dollar strength but also by the sapped British pound.

This image is no longer relevant

The pound sterling is losing ground amid a sell-off in UK government bonds. The yield on 10-year gilts has risen to its highest level since 2008, while 30-year bond yields have reached a 27-year high. Bond prices, which inversely correlate with yields, are falling in sync with the pound.

Key drivers of GBP's decline

The pound's weakness stems from deteriorating fiscal forecasts, sluggish UK economic growth, and persistently high inflation.

According to the latest inflation report, the UK's CPI rose to 2.6% year-on-year in November, the fastest pace since March of last year. Core inflation climbed to 3.5%, marking the second consecutive month of growth. The Retail Price Index also accelerated to 3.6%, the highest level since July 2024.

Economic growth in the UK has effectively stalled. Revised data from late December showed that GDP growth in Q3 2024 remained flat quarter-on-quarter, missing the forecast of a 0.2% increase. This reflects a clear downtrend: GDP grew by 0.7% in Q1, 0.5% in Q2, and 0.0% in Q3. The British economy expanded by just 0.9% year-on-year, down from the earlier estimate of 1.0%.

According to a recent Deutsche Bank report, the UK economy faces a potential contraction in Q4 2024, with forecasting models suggesting a 0.1% quarter-on-quarter decline.

Market concerns and political turmoil

High borrowing costs have raised serious concerns among market participants about the UK's financial situation, leading to further devaluation of the pound. Typically, higher bond yields support the currency, but this correlation has broken down due to serious market worries about the country's economic prospects.

The Financial Times reports that the UK Treasury may need to borrow an additional £10 billion by the end of the fiscal year (March 2025) to meet its debt plans. Analysts fear this limit could be exceeded, forcing the government to either increase taxes or cut spending—measures that could further slow economic growth.

Adding to the pound's woes is the so-called "Trump effect." Allies of Donald Trump have been fiercely critical of UK Prime Minister Keir Starmer, with Elon Musk leading the charge. Musk has publicly accused Starmer of covering up violent crimes during his tenure as head of the Crown Prosecution Service (2008–2013). According to Financial Times insiders, Musk is also privately discussing the possibility of Starmer's removal with far-right allies in the UK before the next general election.

Outlook for GBP/USD

Under these circumstances, the pound is struggling to find a foothold, and any sustained recovery in GBP/USD, even as a correction, is likely only if the US dollar weakens. Meanwhile, the dollar is awaiting December NonFarm Payrolls. Preliminary forecasts suggest that US unemployment will remain at 4.2%. The US economy is expected to add 164,000 jobs in December. Average hourly earnings are projected to hold steady at 4.0%. Even if these figures meet expectations, the US dollar is likely to gain support, given the weak ADP employment report (122,000 jobs).

Technical analysis

The GBP/USD pair impulsively broke through the 1.2280 support level (the lower line of the Bollinger Bands on the D1 timeframe) but failed to consolidate below this target. The price remains between the middle and lower Bollinger Bands levels and below all Ichimoku indicator, which signal a bearish Line Parade.

We could use corrective pullbacks to open short positions with an initial target of 1.2280 (the aforementioned support level) and a secondary target of 1.2240 (the lower Bollinger Bands line on the W1 timeframe).

Seleccione el marco de tiempo
5
min
15
min
30
min
1
hora
4
horas
1
día
1
s.
Gana con los cambios en el valor de las criptomonedas con InstaForex.
Descarga MetaTrader 4 y abre tu primera operación.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    UNIRSE AL CONCURSO

Recommended Stories

Análisis del par GBP/USD. El 22 de abril. La caída del dólar compensará cualquier cambio positivo en la economía.

El par de divisas el par GBP/USD también se movió al alza el lunes, aunque no hubo razones claras ni fundamentos específicos para ello. Sin embargo, la libra esterlina

Paolo Greco 07:35 2025-04-22 UTC+2

Análisis del par EUR/USD. El 22 de abril. Pero el rey está desnudo...

El par de divisas EUR/USD comenzó a caer desde el inicio del lunes. Curiosamente, esta vez la caída de la divisa estadounidense no fue provocada por el presidente estadounidense

Paolo Greco 07:35 2025-04-22 UTC+2

Análisis del par GBP/USD. El 21 de abril. Continúa la subida inercial.

El par de divisas GBP/USD se movió persistentemente al alza incluso el viernes. Si hubiéramos visto un movimiento de este tipo no en los valores máximos del precio, no habría

Paolo Greco 07:49 2025-04-21 UTC+2

Análisis del par EUR/USD. El 21 de abril. El mercado se ha dormido, sólo Trump puede despertarlo.

El par de divisas EUR/USD ni siquiera intentó mostrar movimientos interesantes el viernes. En principio, no es de extrañar, ya que el Viernes Santo se celebró el viernes

Paolo Greco 07:49 2025-04-21 UTC+2

Análisis del par GBP/USD. El 15 de abril. Trump da, Trump quita.

El par GBP/USD también continuó su movimiento ascendente el lunes

Paolo Greco 07:13 2025-04-15 UTC+2

Análisis del par EUR/USD. El 15 de abril. ¿Quién y dónde encontró un motivo para el optimismo?

El par EUR/USD continuó su movimiento ascendente durante el lunes. Aunque esta vez no fue muy fuerte, pero ¿qué importa? si el par de todas formas sigue subiendo constantemente. Ayer

Paolo Greco 07:13 2025-04-15 UTC+2

GBP/USD. Semana importante para la libra

La libra en el par con el dólar gana impulso activamente debido al debilitamiento de la moneda estadounidense. Un apoyo adicional para la libra británica pueden proporcionar los informes macroeconómicos

Irina Manzenko 11:50 2025-04-14 UTC+2

USD/JPY. La inflación en Tokio se acelera, pero el yen sigue siendo vulnerable

El informe publicado hoy sobre el crecimiento de la inflación en la capital de Japón resultó estar en la "zona verde". La publicación permitió a los vendedores del par usd/jpy

Irina Manzenko 12:25 2025-03-28 UTC+2

Análisis del par GBP/USD. El 28 de marzo. La libra no tuvo tiempo de caer, pero volvió a subir.

El par de divisas GBP/USD volvió a cotizarse al alza el jueves, aunque hace unos días comenzó una especie de corrección bajista. El mercado incluso reaccionó a un informe débil

Paolo Greco 07:24 2025-03-28 UTC+2

Análisis del par EUR/USD. 28 de marzo. A Donald Trump le gusta hacer sorpresas.

El par de divisas EUR/USD mantuvo una inclinación bajista durante el jueves, pero se negoció al alza durante el día. La volatilidad volvió a ser baja, lo que indica

Paolo Greco 07:24 2025-03-28 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.