GBP/USD Forecast on January 2, 2025

[Ben Graham]

On the hourly chart, the GBP/USD pair on Wednesday declined into the support level of 1.3437–1.3470, but so far has formed neither a rebound nor a breakout. Thus, a rebound of quotes from this zone would work in favor of the British pound and a resumption of growth toward the resistance level of 1.3526–1.3539. A consolidation of quotes below the 1.3437–1.3470 level would work in favor of the U.S. dollar and a continuation of the decline toward the support level of 1.3352–1.3362.

The wave situation remains "bullish." The last completed upward wave broke the previous peak, while the new downward wave has so far failed to break the previous low. The news background for the pound has been weak in recent weeks, but the information backdrop in the U.S. also leaves much to be desired. At the beginning of the new year, the bulls retreated slightly, but the trend remains intact, and traders are waiting for economic data.

The news background on Wednesday was essentially absent. However, on December 31, traders were unlikely to expect the release of important reports. Today is a half-holiday, but the market is gradually resuming operations, and by Monday trading may return to its usual rhythm. Already on Wednesday, trader activity began to increase, which indicates the end of the holiday period. Next week, inflation and unemployment reports will be released in the European Union, while in the U.S. there will be Nonfarm Payrolls, unemployment data, and ISM business activity indices. Thus, next week traders will have to determine who will dominate at the beginning of 2026. For the dollar, the key negative factor remains the "dovish" outlook for FOMC monetary policy. However, bullish traders will not attack forever based on this factor alone. New economic data are required to allow for new conclusions.

On the 4-hour chart, the pair has consolidated above the 100.0% corrective level at 1.3435, which allows expectations for continued growth toward the next Fibonacci level of 127.2% at 1.3795. A "bearish" divergence has formed on the CCI indicator, which triggered a reversal in favor of the U.S. dollar and a modest decline toward the support level of 1.3369–1.3435. A rebound of quotes from the 1.3435 level would allow expectations of a new rise in the British pound.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category became more "bullish" over the last reporting week. The number of long positions held by speculators increased by 1,649, while the number of short positions decreased by 25,368. The gap between the number of long and short positions is now effectively as follows: 61 thousand versus 110 thousand. As we can see, bears dominated in December, but the British pound seems to have already exhausted its downward potential. At the same time, the situation with contracts on the euro currency is the opposite. I still do not believe in a "bearish" trend for the pound.

In my view, the British pound still looks less "dangerous" than the dollar. In the short term, the U.S. currency may occasionally enjoy demand in the market. But not in the long term. Donald Trump's policies led to a sharp deterioration in the labor market, and the Federal Reserve is forced to ease monetary policy to stop the rise in unemployment and stimulate job creation. For 2026, the FOMC does not plan strong monetary easing, but at the moment no one can be sure that the Fed's stance will not shift to a more "dovish" one during the year.

U.S. and U.K. Economic Calendar:

On January 2, the economic events calendar contains no entries. The influence of the news background on market sentiment on Friday will be absent.

GBP/USD Forecast and Trading Advice:

Selling the pair was possible on a rebound from the 1.3526–1.3539 zone on the hourly chart with a target of 1.3470. The target was reached. I would not rush into new sales until there is a close below the 1.3437 level. I recommended buying on a rebound from the 1.3437–1.3470 level with a target of 1.3533–1.3539. The target was achieved. New buys are recommended on another rebound from the 1.3437–1.3470 level.

The Fibonacci grids are built from 1.3470–1.3010 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.

The material has been provided by InstaForex Company - www.instaforex.com