- GBP/USD moves between 1.2450 and 1.2550 following conflicting reports on President-elect Trump's US tariff plans.
- Momentum in the UK services sector slows as the December S&P Global Services PMI falls from 51.4 to 51.1.
- Federal Reserve Governor Lisa Cook suggests a cautious approach to rate cuts, citing persistent inflation and a strong labor market.
The British Pound begins the week on a strong footing against the US Dollar after news surfaced that US President-elect Trump's aides are considering tariffs on “certain sectors,” according to The Washington Post. However, Trump quickly denied the report, claiming it was incorrect. As a result, GBP/USD has been trading with volatility within the 1.2450 – 1.2550 range as the market digests these conflicting updates.
Market Sentiment: Economic Data and Tariff Speculation Impact GBP/USD
According to sources familiar with the matter, the Washington Post article indicated that the tariffs under consideration would target only critical imports. Meanwhile, UK economic data showed a slowdown in the services sector. The December S&P Global Services PMI dropped from 51.4 to 51.1, reflecting weaker business activity. Additionally, the British Chambers of Commerce reported a decline in business confidence, which hit its lowest level since the "mini-budget" under former PM Liz Truss in 2022. According to Reuters, businesses are the most dissatisfied with taxation since 2017, and confidence in future sales is at its lowest since late 2022.
US Economic Updates and Federal Reserve Remarks
On the US side, Federal Reserve Governor Lisa Cook suggested that the central bank may proceed cautiously with rate cuts due to persistent inflation and a resilient labor market. S&P Global also revealed that the US Services PMI declined to 56.8 from 58.5, although this was still above the forecast of 56.1.
GBP/USD Price Forecast: Technical Outlook
The daily chart for GBP/USD suggests potential downside unless the pair closes above the November 22 swing low at 1.2486. In that case, GBP/USD could consolidate and potentially challenge the next key resistance level at 1.2607, the December 30 peak. However, if the pair remains below 1.2500, it may continue to consolidate within the 1.2480 – 1.2500 range before sellers push the price towards 1.2400.
