GBP/USD Forecast: Pound Sterling trades near key level as markets await PMIs

GBP/USD stabilized near 1.2700 following Tuesday's volatile action.
1.2700 aligns as a near-term pivot level for the pair.
PMI surveys from the UK and the US will be looked upon for fresh catalysts.

Eren Sengezer FXStreet

After rising toward 1.2750 early Tuesday, GBP/USD made a sharp U-turn and lost nearly 100 pips during the American trading hours. The improving risk mood toward the end of the day, however, helped the pair erase a large portion of its daily losses. Early Wednesday, GBP/USD holds steady at around 1.2700.

S&P Global/CIPS Composite PMI in the UK is forecast to tick up to 52.2 in January's flash estimate from 52.1 in December. In case this reading comes in below 50 and show a contraction in the private sector's business activity, the initial reaction could revive expectations for an early Bank of England policy pivot and weigh on Pound Sterling.

Later in the day, S&P Global will release PMI surveys' outcomes for the US as well. The Services PMI is expected to hold above 50 in early January. A stronger-than-expected Services PMI reading in the US could provide a boost to the USD and weigh on GBP/USD.

Investors, however, could opt to wait to see the fourth-quarter US Gross Domestic Product (GDP) on Thursday before taking large positions.

Meanwhile, US stock index futures were last seen rising between 0.2% and 0.6%. In case risk flows dominate the action following a bullish opening in Wall Street, the USD could have a hard time attracting investors.

GBP/USD Technical Analysis

GBP/USD trades near 1.2700, where the 20-, 50-, and 100-period Simple Moving Averages (SMA) on the 4-hour chart are located. In case this level stays intact as support, 1.2760 (static level) could be seen as next resistance before 1.2780 (static level) and 1.2820 (end-point of the latest uptrend).

Below 1.2700, immediate support aligns at 1.2680 (200-period SMA) before 1.2650 (50-day SMA, Fibonacci 23.6% retracement of the latest uptrend).

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD stays below 1.1800 as markets await Fed speeches

EUR/USD remains trapped in a tight range below 1.1800 in the second half of the day on Tuesday. The pair struggles amid a modest US Dollar strength and an improvement in risk sentiment, even as US tariff uncertainty lingers. The focus now remains on comments from Federal Reserve officials.

GBP/USD stays defensive below 1.3500 as USD firms up

GBP/USD stays on the back foot below 1.3500 in the European trading hours on Tuesday. The pair declines as the US Dollar rebounds from losses recorded over the previous two sessions. Traders will focus on the US weekly ADP Employment Change and Consumer Confidence data due later in the day, along with speeches from Federal Reserve officials.

Gold retreats below $5,200 on renewed USD strength

Gold stages a deep correction following Monday's rally and trades below $5,200. Following the previous day's knee-jerk fall in reaction to US President Donald Trump's new global tariffs and the subsequent bounce, the US Dollar gathers strength and weighs on XAU/USD ahead of Fed policymakers' speeches.

Dogecoin, Shiba Inu, and Pepe extend losses on bearish signals

Meme coins are facing renewed selling pressure amid fading broad risk-on sentiment so far this week, with Dogecoin, Shiba Inu, and Pepe extending their losses after recent corrections.

AI-scare trade and tariff uncertainty takes hold

It was quite a day, with AI-disruption fears and tariff uncertainty triggering a risk-off session. By now, it's nearly impossible to have missed the Supreme Court's 6-3 decision that struck down US President Donald Trump's reciprocal tariffs last Friday.

Dogecoin, Shiba Inu, and Pepe extend losses on bearish signals

Meme coins are facing renewed selling pressure amid fading broad risk-on sentiment so far this week, with Dogecoin, Shiba Inu, and Pepe extending their losses after recent corrections.