GBP/USD rose on Tuesday, supported by comments from Bank of England (BoE) Governor Andrew Bailey, who indicated the possibility of further rate cuts in 2025. Investor sentiment remains relatively optimistic, although attention is now turning to the US Nonfarm Payrolls (NFP) report due on Friday, which could influence market direction.
BoE Governor Hints at Rate Cuts in 2025, GBP Pulls Back and Rebounds
BoE Governor Bailey’s remarks on Thursday suggesting up to four rate cuts in 2025 initially caused a brief stumble in the British Pound, with GBP/USD dipping during the London session. However, traders quickly regained confidence, pushing the pair back toward the high end of its range for the day. Bailey reaffirmed a cautious, data-dependent approach, which helped stabilize expectations that the BoE will likely leave interest rates unchanged at its meeting on December 19.
US Labor Data Weighs on Dollar Ahead of Key Jobs Report
In the US, Initial Jobless Claims for the week ending November 29 rose to 224,000, the highest in six weeks, exceeding expectations of 215,000. Additionally, Challenger Job Cuts increased to 57,727 in November. While these mid-tier labor indicators point to potential weakness, the upcoming NFP report on Friday will be the key focus. The market anticipates a rebound in job gains, with forecasts calling for 200,000 new jobs in November, a recovery from October’s dismal addition of just 12,000. Investors are hoping that the October slump, attributed to labor strikes and hurricane-related layoffs, will be reversed.
GBP/USD Technical Outlook: Key Resistance Levels in Focus
The daily chart for GBP/USD shows the pair trading around 1.2758, attempting to recover from a sharp downtrend that began in late July. After reaching a high near 1.3140 in early September, GBP/USD faced a significant sell-off, hitting a low of 1.2520 in early November. The break below the 200-day EMA at 1.2836 signaled a shift in sentiment, but recent price action suggests a rebound, with the pair reclaiming the 1.2700 level and testing key resistance zones.
The 50-day EMA at 1.2884 and the 200-day EMA at 1.2836 now act as dynamic resistance levels. A decisive break above these levels would be crucial for a sustained bullish trend. On the upside, the 1.2900 level is a critical barrier, aligning closely with the October swing high. If GBP/USD surpasses this zone, it could signal a medium-term trend reversal and open the door for a test of September’s highs near 1.3140.
Conversely, failure to hold recent gains could see GBP/USD dip back toward the 1.2600 support zone or the November low around 1.2520.
The MACD indicator is also signaling a pivotal moment for the pair. The MACD line has crossed above the signal line, suggesting growing bullish momentum. However, the histogram remains subdued, indicating a lack of strong conviction. Traders should closely monitor the upcoming NFP report and other catalysts to determine whether this recovery will gather pace. A sustained close above the 200-day EMA would favor the bulls, while a failure to break 1.2900 could allow bears to regain control and push the pair back below 1.2700.
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