- On Friday, the GBP/USD pair climbed above the 1.2400 level again.
- At the end of the week, markets adopted a cautious attitude towards risk.
- On Friday, UK data essentially missed the mark, US PMI data beat the Street.
The GBP/USD pair made a modest recovery on Friday, gaining around four-tenths of one percent and ending the first trading week of 2025 again above the 1.2400 level. UK macroeconomic and consumer credit data broadly missed the mark on Friday, but smaller data barely showed on the needle. On the U.S. side, the results of the U.S. business activity survey helped maintain positive investor sentiment, keeping risk appetite high.
The U.S. ISM Purchasing Managers Activity Index (PMI) was higher than expected in December, reaching 49.3 compared to an expected hold of 48.4. This is the highest reading for a key indicator of manufacturing activity in nine months, but not all is rosy in the outlook for the manufacturing sector: The ISM Manufacturing Employment Index and the ISM Manufacturing Price Paid Index printed in December both missed expectations, suggesting inflation at manufacturers are still a problem beneath the surface, and companies continue to cut more jobs than expected.
The UK will continue its trend of having little or no meaningful data on the macroeconomic release calendar next week; everything that ends up in the GBP side of the dataset will be high-impact releases. On the American side, American markets and institutions will take a day off on Thursday in connection with the death of former President Jimmy Carter, who died on December 29 at the age of 100. The first 2025 U.S. Nonfarm Payrolls (NFP) print will be released on Friday.
GBP/USD price forecast
Despite the pair’s last-minute bullish move to breach the 1.2400 level, Cable ends the first trading week of the year on a bearish note. The GBP/USD currency pair is down 1.3% on the week and is still poised for an extended decline to 2024 lows near 1.2300.
Price action continues to favor the lower end of the situation as the 50-day (1.2685) and 200-day (1.2785) exponential moving averages (EMAs) extend the bearish crossover, maintaining the technical ceiling of any upside attempts.
