The GBP/USD pair climbed back above the 1.2400 handle on Friday, ending the first trading week of 2025 on a positive note. While UK macroeconomic and consumer credit data missed expectations, the impact was minimal as US PMI figures beat the street, helping to keep investor sentiment cautiously risk-on. The US ISM Manufacturing PMI activity surveys exceeded expectations for December, with the highest print in nine months. However, not all aspects of the manufacturing outlook were positive, as the ISM Manufacturing Employment Index and Prices Paid Index both missed expectations.
Looking ahead to the next week, the UK has minimal impactful data releases scheduled, while the US will observe Thursday in honor of former President Jimmy Carter’s passing and have the first US Nonfarm Payrolls print of 2025 on Friday. Despite a last-minute bullish push to bring GBP/USD back above 1.2400, the pair remains bearish for the week, down 1.3% and poised for a potential drop towards 2024’s lows near 1.2300.
The Pound Sterling (GBP) is the oldest currency in the world, with the Bank of England issuing it as the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange, with key trading pairs including GBP/USD (Cable), GBP/JPY (Dragon), and EUR/GBP. The value of the Pound Sterling is influenced primarily by monetary policy decisions by the Bank of England, which aims for price stability through interest rate adjustments. Economic data releases such as GDP, PMIs, employment, and Trade Balance also impact the value of the GBP.
The Bank of England’s monetary policy decisions are crucial for the Pound Sterling, with interest rate adjustments made to control inflation and stimulate economic growth. Strong economic data is positive for the GBP as it attracts foreign investment and may lead to higher interest rates. Weak economic data, on the other hand, can cause the Pound Sterling to weaken. Additionally, the Trade Balance indicator measures the difference between exports and imports, with a positive balance strengthening the currency due to increased demand for exports.
In conclusion, the GBP/USD pair ended the first trading week of 2025 on a positive note, climbing back above the 1.2400 handle despite mixed economic data releases from the UK. Positive US PMI figures helped to keep investor sentiment cautiously risk-on, with the pair remaining bearish overall for the week. The Pound Sterling’s value is influenced by various factors, including monetary policy decisions by the Bank of England, economic data releases, and the Trade Balance indicator. Looking ahead, market participants will be keeping a close eye on upcoming data releases and events to gauge the future direction of the GBP/USD pair.
