The US dollar index consolidated slightly, while the British pound remained range-bound against the dollar.
2025-12-16 13:59:53
On Tuesday during Asian trading hours, the pound continued its consolidation against the dollar, holding steady around 1.3360. The market lacked a clear direction, primarily reflecting investors' decision to remain on the sidelines ahead of a series of important macroeconomic data releases and central bank events this week, avoiding premature betting.
From the UK perspective, the latest monthly employment data will be released first, followed by inflation data and the highly anticipated Bank of England policy meeting. This information will directly influence market assessments of the UK's monetary policy outlook.
Currently, market expectations are rising that the Bank of England will cut interest rates at its meeting this week, which has somewhat diminished the appeal of the pound and made bullish sentiment cautious.
If employment and inflation data continue to indicate an economic slowdown, expectations of interest rate cuts could solidify further, putting pressure on the pound. Meanwhile, global risk sentiment has cooled slightly, and safe-haven demand has rebounded, making the pound relatively weaker against the dollar.
However, the dollar itself also lacks strong upward momentum. As market bets increase that the Federal Reserve may continue to cut interest rates in the future, the dollar index is hovering near its lowest level in nearly two months, limiting the dollar's upside potential.
Furthermore, expectations regarding the future policy orientation of the Federal Reserve leadership continue to influence the dollar's trajectory. The market generally believes that a new, dovish stance may strengthen the easing policy bias, and even with a relatively strong economic fundamentals, it will be difficult to completely reverse expectations of interest rate cuts.
Against this backdrop, the dollar's continued weakness provided some support for the pound against the dollar, allowing the exchange rate to stabilize above key technical levels. Overall, the pound/dollar pair is more likely to maintain a consolidation pattern before the release of key data from the Bank of England and the US, awaiting new fundamental guidance to break the current equilibrium.
From a technical perspective, the GBP/USD pair is currently in a medium-term consolidation phase, with the price fluctuating around key moving averages. During the recent pullback, the exchange rate successfully held support at the 200-day moving average, indicating that buying interest remains somewhat defensive. The area around 1.3350, where this moving average is located, has become a key battleground for short-term bulls and bears.
As long as the exchange rate can hold above 1.3350, the overall structure remains favorable for maintaining a slightly bullish consolidation, and a technical rebound in the short term driven by data releases cannot be ruled out. However, if this support level is effectively broken, the exchange rate may fall back to the previous lows, at which point the downside risk will significantly increase.
On the upside, initial resistance is seen around 1.3400, which is the upper edge of the recent consolidation range and a key defensive position for short-term bears. A break above this resistance, driven by positive data or policy signals, could lead to a further test of the 1.3450 level, thereby improving the short-term technical outlook.
However, upside potential may remain limited until fundamental uncertainties are resolved. Overall, the technical picture suggests that GBP/USD is in a consolidation phase before a directional move, and the 200-day moving average will be a crucial reference for judging short-term trends.
Editor's Note:
The current sideways movement of the pound against the dollar is essentially a result of the offsetting expectations of a Bank of England rate cut and bets on further easing by the Federal Reserve. The pound lacks independent upward momentum, while the dollar is also struggling to establish a sustained upward trend. Before the release of key data and central bank decisions, the exchange rate is likely to remain range-bound; the true trend will only be confirmed after clearer policy signals emerge.
From the UK perspective, the latest monthly employment data will be released first, followed by inflation data and the highly anticipated Bank of England policy meeting. This information will directly influence market assessments of the UK's monetary policy outlook.
Currently, market expectations are rising that the Bank of England will cut interest rates at its meeting this week, which has somewhat diminished the appeal of the pound and made bullish sentiment cautious.
If employment and inflation data continue to indicate an economic slowdown, expectations of interest rate cuts could solidify further, putting pressure on the pound. Meanwhile, global risk sentiment has cooled slightly, and safe-haven demand has rebounded, making the pound relatively weaker against the dollar.
However, the dollar itself also lacks strong upward momentum. As market bets increase that the Federal Reserve may continue to cut interest rates in the future, the dollar index is hovering near its lowest level in nearly two months, limiting the dollar's upside potential.
Furthermore, expectations regarding the future policy orientation of the Federal Reserve leadership continue to influence the dollar's trajectory. The market generally believes that a new, dovish stance may strengthen the easing policy bias, and even with a relatively strong economic fundamentals, it will be difficult to completely reverse expectations of interest rate cuts.
Against this backdrop, the dollar's continued weakness provided some support for the pound against the dollar, allowing the exchange rate to stabilize above key technical levels. Overall, the pound/dollar pair is more likely to maintain a consolidation pattern before the release of key data from the Bank of England and the US, awaiting new fundamental guidance to break the current equilibrium.
From a technical perspective, the GBP/USD pair is currently in a medium-term consolidation phase, with the price fluctuating around key moving averages. During the recent pullback, the exchange rate successfully held support at the 200-day moving average, indicating that buying interest remains somewhat defensive. The area around 1.3350, where this moving average is located, has become a key battleground for short-term bulls and bears.
As long as the exchange rate can hold above 1.3350, the overall structure remains favorable for maintaining a slightly bullish consolidation, and a technical rebound in the short term driven by data releases cannot be ruled out. However, if this support level is effectively broken, the exchange rate may fall back to the previous lows, at which point the downside risk will significantly increase.
On the upside, initial resistance is seen around 1.3400, which is the upper edge of the recent consolidation range and a key defensive position for short-term bears. A break above this resistance, driven by positive data or policy signals, could lead to a further test of the 1.3450 level, thereby improving the short-term technical outlook.
However, upside potential may remain limited until fundamental uncertainties are resolved. Overall, the technical picture suggests that GBP/USD is in a consolidation phase before a directional move, and the 200-day moving average will be a crucial reference for judging short-term trends.
Editor's Note:
The current sideways movement of the pound against the dollar is essentially a result of the offsetting expectations of a Bank of England rate cut and bets on further easing by the Federal Reserve. The pound lacks independent upward momentum, while the dollar is also struggling to establish a sustained upward trend. Before the release of key data and central bank decisions, the exchange rate is likely to remain range-bound; the true trend will only be confirmed after clearer policy signals emerge.
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