During the European trading session on Monday (December 15), the intraday chart of GBP/USD showed a strong upward trend, initially fluctuating at lower levels before surging significantly in the afternoon to reach a new high for the period. The bullish momentum was strong. GBP/USD had previously reached its highest level since October 7. The exchange rate has rebounded nearly 3% from its November low, and this upward trend is expected to continue over the coming weeks.
Upcoming macroeconomic data releases from the UK and the US
The GBP/USD exchange rate continued to rise due to the impact of the Federal Reserve’s final interest rate decision of the year. In this decision, the Federal Reserve announced a 50-basis-point rate cut, lowering the benchmark interest rate to a range of 3.50%-3.75%.
Federal Reserve officials simultaneously initiated a quantitative easing policy, starting monthly purchases of short-term government bonds worth $40 billion. Typically, quantitative easing increases dollar liquidity, which could place downward pressure on the GBP/USD exchange rate in the long term.
Looking ahead, the U.S. Bureau of Labor Statistics (BLS) will release the latest inflation and employment data this week. The market expects that the October non-farm payroll report will show an addition of over 50,000 jobs, far below the 112,000 added in September.
The weakening employment data can be attributed to the suspension of hiring in key departments due to the government shutdown. Additionally, the Bureau of Labor Statistics will also release the latest consumer inflation report on Friday.
The aforementioned data will help the Federal Reserve determine whether more rate cuts are needed in 2025 than previously anticipated. The guidance provided by the Fed during this meeting indicates that there will only be one rate cut in 2025.
Another key factor influencing the GBP/USD exchange rate is the upcoming economic data release from the UK. The UK Office for National Statistics (ONS) will publish the latest employment data on Tuesday, followed by consumer inflation data the next day.
Economists predict that the annual growth rate of the UK’s overall Consumer Price Index (CPI) in November will slow to 3.5% from 3.6% in October; the core inflation rate, excluding volatile food and energy prices, is expected to remain at 3.4%.
Market expectations suggest that despite inflation remaining above the 2% target level, the Bank of England will announce a 25-basis-point rate cut at its next interest rate meeting.
Technical Analysis
The daily chart shows that the GBP/USD exchange rate has continued to rebound over the past few months, climbing from the November low of 1.300 to a high of 1.3435.
The exchange rate has broken through the 50-day moving average and is currently approaching the key reversal pivot point (6/8) in the Murray Math indicator; simultaneously, the trend has moved above the Ichimoku Cloud indicator, with both the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) showing upward momentum.
Therefore, it is highly probable that GBP/USD will continue its upward trend, with the bullish target set at the psychological level of 1.3600. If the exchange rate falls below the support level of 1.3200, the bullish outlook will be invalidated.
Bullish Perspective
Buy GBP/USD, with a take-profit level set at 1.3600. Stop-loss level set at 1.3200. Time horizon: 1-2 days.
Bearish Perspective
Sell GBP/USD, with a take-profit level set at 1.3200. Stop-loss level set at 1.3600.
