GBPUSD Analysis
| Week Ending 2024-12-20 | |||
| Open | High | Low | Close |
| 1.27 | 1.27 | 1.25 | 1.26 |
| Performance | |||||
| Period | Pct | Chg | Momentum | ||
| Friday | 0.56% | 69.8 Pips |  |
||
| Week 2024-12-20 | -0.47% | -59.6 Pips |  |
||
| December | -1.02% | -129 Pips | |
||
Upcoming key events for the new week (London Time)
Mon 07:00 AM GDP (3-mth) 
Wed 12:00 AM Christmas Day
Wed 05:00 AM Christmas Day Thu 12:00 AM Boxing Day
What happened over the week
In the U.S., economic indicators showed a mix of stability and slight declines. The U.S. Index of Consumer Expectations decreased to 3%, while the Consumer Sentiment Index remained unchanged at 74 points in December, as reported by the University of Michigan. Personal income growth slowed to 0.3% in November from 0.7% in October, according to the Bureau of Economic Analysis. Although consumer spending saw a slight upsurge from a revised 0.3% increase, the PCE Price Index excluding food and energy retained a steady 2.8% over 12 months. November witnessed a dip in housing starts, though building permits increased, indicating potential future construction activity. The Federal Reserve cut the Federal Funds Rate to 4.5%, remaining cautious on further reductions, reflecting an adaptable policy stance amid a moderate GDP growth rate of 3.1% in Q3.
In the U.K., retail sales showed some improvement in November, with volumes excluding fuel increasing by 0.3% and overall sales increasing by 0.2% following declines in October. Despite these upticks, the annual retail sales volumes dropped significantly. Inflationary pressures were evident as the Core CPI Inflation Rate rose to 3.5% and the Consumer Prices Index increased to 2.6% over 12 months. Employment metrics showed a decline in employment change and an increase in average earnings, reflecting labor market tightness. The Bank of England maintained the interest rate at 4.75%, signaling a steady monetary approach amidst mixed economic signals.
The news affects the GBPUSD exchange rate by contributing to the recent volatility and downward pressure seen on the pound sterling. The GBPUSD saw a fall to its lowest level since May 2024, driven by a mixture of economic data from both countries. The U.S.’s stable outlook, coupled with a cautionary Federal Reserve, creates a supportive backdrop for the dollar. In contrast, the U.K.’s persistent inflation concerns and softer retail performance apply pressure on the pound, leading to its decline against the stronger U.S. dollar. Economic releases ahead, including GDP figures, could further steer the direction of GBPUSD. Overall, while short-term relief in the form of positive retail sales is possible, sustained fundamental differences between U.S. and U.K. economic prospects continue to weigh heavily on the exchange rate.
From X (Twitter)
The Monetary Policy Committee voted by a majority of 6-3 to maintain #BankRate at 4.75%. Find out more: https://t.co/FWuXvEhN0R pic.twitter.com/9724Z6Edhd
— Bank of England (@bankofengland) December 19, 2024
What can we expect from GBPUSD for the new week and what happened on Friday?
GBPUSD on Friday rose 0.56% to 1.26. Price is below 9-Day EMA while Stochastic is falling. For the week ending 2024-12-20, the pair dropped -0.47% or -59.6 pips lower.
Looking ahead, GBPUSD looks mixed as the pair is likely to consolidate above week low of 1.25.
For the new week, our technical outlook looks bearish, immediate support level is at 1.25 (WS1) with break below could see further selling pressure towards 1.23 (WS2). For potential buyers, as the current momentum is bearish, we prefer to look at firm break of the week high of 1.27 as an important indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below week low of 1.25 would indicate selling pressure.
For the month of December, GBPUSD is down by -1.02% or -129 pips lower.
Weekly key levels to watch out:
| R3 | 1.30 |
| R2 | 1.28 |
| R1 | 1.27 |
| Weekly Pivot | 1.26 |
| S1 | 1.25 |
| S2 | 1.23 |
| S3 | 1.22 |
You might also be interested in:
Retail sales, Great Britain: November 2024 Source: National Statistics Retail sales, Great Britain: November 2024 time series Source: National Statistics
Gross Domestic Product, (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Third Quarter 2024 Source: Bureau of Economic Analysis U.S. International Transactions, 3rd Quarter 2024 Source: Bureau of Economic Analysis Federal Reserve Board and Federal Open Market Committee release economic projections from the December 17-18 FOMC meeting Source: Federal Reserve Federal Reserve issues FOMC statement Source: Federal Reserve New Residential Construction Source: Census Bureau Manufacturing and Trade Inventories and Sales Source: Census Bureau Producer price inflation, UK: November 2024 time series Source: National Statistics Producer price inflation, UK: November 2024 Source: National Statistics Consumer price inflation, UK: November 2024 time series Source: National Statistics Consumer price inflation, UK: November 2024 Source: National Statistics Advance Monthly Sales for Retail and Food Services Source: Census Bureau UK labour market: December 2024 Source: National Statistics