- GBP/USD hovered near the 1.2500 level on Monday.
- Pound traders remained cautious as attention shifted to the US Dollar.
- Market sentiment was mixed at the start of the new week.
GBP/USD remained volatile on Monday, fluctuating as broad-market flows into and out of the US Dollar (USD) pulled Pound Sterling (GBP) traders along for the ride. With a quiet week ahead on the UK economic calendar, market attention has shifted away from the Cable trade, focusing instead on trade war concerns and the upcoming Federal Reserve (Fed) rate decision.
The Federal Reserve is widely expected to hold rates steady at its meeting on Wednesday, but expectations for further rate cuts this year have been rising. According to the CME’s FedWatch Tool, markets are now pricing in a total of 50 basis points in rate cuts through 2025, up from the previous forecast of 25 basis points.
Over the weekend, US President Donald Trump initiated a notable trade dispute with Colombia, threatening a 50% tariff on all goods imported from Colombia if the country refused to accept deported Colombian migrants. Though much of the conflict occurred on social media and had limited immediate impact on global markets, Trump’s willingness to use tariffs on short notice may unsettle investors who have become accustomed to a more predictable approach to trade policy.
GBP/USD Price Forecast
GBP/USD fluctuated around the 1.2500 level on Monday, reaching an intraday high above 1.2520 before dipping to the 1.2480 range. With price action stalling near the 50-day Exponential Moving Average (EMA) at 1.2517, a potential near-term ceiling is forming, putting pressure on buyers and giving bears an opportunity to assert control on the daily charts.
GBP/USD daily chart
