Forex Analysis & Reviews: 30.12.2024 - The Pound Loses Victory at...

Live Chat

InstaForex - Official partner of Dragon Racing

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex Loprais Team - Official participant of the Dakar rally

30.12.2024 09:48 AM

The Pound Loses Victory at the Finish Line

You can't go far with just one central bank. For quite some time, the Bank of England's (BoE) cautious strategy benefited the pound. The gradual approach taken by Andrew Bailey and his colleagues in reducing the repo rate, coupled with the fastest economic growth in the G7, positioned sterling as the top performer among the G10 currencies. However, Donald Trump's return to power in the United States allowed the US dollar to overtake it at the finish line, causing the victory to slip from the hands of GBP/USD bulls.

Despite being one of the first to initiate a cycle of monetary easing, the BoE's recent pauses in repo rate cuts have resulted in the rate ending 2024 higher than the Federal Reserve's funds rate. In 2025, both the US and the UK are expected to implement two rounds of monetary easing, which will leave neither GBP/USD buyers nor sellers at a clear advantage. However, the divergence in economic growth suggests a different narrative.

Central Bank Rate Dynamics

In the first half of the year, the UK economy appeared to be sailing ahead, thanks partly to the Labour Party's victory in the parliamentary elections. The party promised to make Britain the leading economy in the G7, and initially, it seemed achievable. However, a budget deficit discovered after the Conservatives' tenure and subsequent tax hikes soured the mood of GBP/USD enthusiasts. Initially, measures announced by Chancellor Rachel Reeves seemed poised to boost GDP, but now it has become obvious that they will slow it down.

In the third quarter, the UK's GDP stopped growing, and the figures for the second quarter were revised down from +0.5% to +0.4%. The BoE forecasts no economic expansion for the fourth quarter. In contrast, the Federal Reserve Bank of Atlanta projects US GDP growth at 3.1%. This stark disparity poses a significant challenge for GBP/USD bulls.

UK Economic Dynamics

The situation may deteriorate further. If Donald Trump successfully implements his campaign promises, the gap between economic growth in the US and the UK could widen. Fiscal stimulus might boost US GDP growth, while trade tariffs could hinder the UK's economy. Realizing the "America First" agenda would likely result in significant negative impacts on the GBP/USD exchange rate.

For sterling bulls, there remains only one glimmer of hope: that Congress will limit Trump's authority. Despite the Republican majority, Trump's initial proposal to extend the debt ceiling to 2027 and increase its size was blocked by members of his own party. What about fiscal stimulus measures? Could they encounter similar opposition?

From a technical perspective, on the daily GBP/USD chart, bulls are attempting to form a "Double Bottom" reversal pattern and push the pair's quotes back into the fair value range of 1.259–1.278. If successful, the likelihood of a continued rebound to 1.267 and 1.270 will increase. Conversely, a rejection from these levels could create selling opportunities for the pound, especially if sterling buyers fail to break through the resistance at $1.259.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.