GBP/USD Strategy – Strong U.S. Retail Data, GBP/USD Shows Weakness

Fundamental Analysis:

Yesterday, the UK’s three-month average earnings including bonuses rose from 4.4% to 5.2%, hindering the inflation reduction process and causing traders to reduce bets on Bank of England rate cuts next year. The Bank of England is now expected to cut rates by about 55 basis points by the end of 2025, compared to the previous forecast of 72 basis points. This provided temporary strength to the British pound.

However, with the UK unemployment rate at 4.63%, the Bank of England still faces pressure to cut rates. Additionally, the U.S. November retail sales data showed strong performance, recording a 0.7% increase, beating the previous figure of 0.5%. This suggests that the Federal Reserve may slow down the pace of rate cuts next year. The difference in monetary policy flexibility between the two central banks is weakening GBP/USD's rebound momentum.

Technical Analysis:
On the 1-hour chart, GBP/USD has been fluctuating and rising from its low, temporarily forming a bullish pattern with dual moving averages. However, the overall downward structure has not completely changed. Additionally, the candlesticks have twice tested and been rejected at the lower edge of the previous fluctuation range. Therefore, traders without positions can still consider entering short positions at the current resistance level.

Trading Recommendations:
Short GBP/USD at 1.2683.

Target: 1.2613. Stop-loss: 1.2729.

Support Level: 1.2613 Resistance Level: 1.2728

Note: The above content is for reference only and does not represent the platform's stance. Maintain your strategy and implement appropriate risk controls.