Last week, the Bank of England (BOE) lowered interest rates by 0.25% to 4.5%, as expected. However, two of the nine BOE members wanted a bigger cut of 0.5%, making investors believe more rate cuts could happen soon. This caused the British pound to weaken.
At the same time, concerns about inflation due to Trump’s tariff policies led to more demand for the U.S. dollar, which kept the pound from rising.
Last week, the UK construction industry report showed weak economic activity. This week, the UK will release its GDP (economic growth) data for October to December. If the number is lower than expected, people may expect more rate cuts, and the pound could fall further. Even if the number is better than expected, the UK economy still faces challenges, including Trump’s tariffs, so the pound may not rise much.
The pound may have already reached a short-term peak at the lower half of the 1.25 level.
This week’s expected GBP/USD range: 1.2550 – 1.2200
Note: This analysis does not guarantee profit. Make your own decisions when trading.