The GBP/USD pair began the trading week on a weaker note, sliding around 0.3% on Monday to dip below 1.2550. With a sparse UK economic calendar and thin market conditions dominating the year-end period, the pair remains constrained within a narrow range near the lower bounds of recent price action.
Tepid Market Conditions Dominate
Global trading volumes are subdued as the year-end holiday season stifles activity, compounded by the upcoming New Year’s Day closures midweek. Broader market flows and position adjustments are dictating Cable’s moves, with little influence from UK-specific data in the near term.
Across the Atlantic, the December US ISM Manufacturing PMI, due Friday, will be the week’s primary data event. The PMI is expected to inch down to 48.3 from 48.4, reflecting a continued slowdown in manufacturing activity. Several Federal Reserve officials are also slated to speak later in the week, potentially offering further insights into the Fed’s outlook for 2024 interest rate adjustments.
GBP/USD Technical Outlook
GBP/USD remains locked in a sideways channel, hovering just above 1.2500. While the pair has stabilized since hitting multi-month lows in November, attempts at a bullish recovery have struggled to gain traction. Buyers failed to mount a meaningful challenge of the 200-day Exponential Moving Average (EMA), now declining through 1.2800.
As markets return to full activity after the New Year, traders should prepare for potential breakouts from the current consolidation range, with broader market flows likely to drive directional moves in the absence of significant UK economic data.
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