- The British Pound has reached a new high in 2025 against the US Dollar, and further gains are possible in the near term.
- According to licensed trading companies' platforms, the GBP/USD exchange rate reached the resistance level of 1.2715, its highest since December 18, amid a steady increase in expectations that the US Federal Reserve has room to cut interest rates more than twice in 2025.
- Just two weeks ago, the market witnessed a small cut in December 2025, but markets have since added another 30 basis points to expectations amid signs that the US economy is calming down from the strong growth we witnessed at the end of 2025.
Mixed results of US economic data
Recently, according to economic calendar data, new data from the Conference Board showed that US consumer confidence has declined significantly since Trump took office, amid a flurry of political announcements and restructuring. Data showed that confidence in January fell to its lowest level since June of last year, while the expectations index also fell to its lowest level since June. Commenting on this, HSBC analysts said: "The notable weakness in US consumer confidence data has added momentum to the idea that public sector job losses could create a turning point for the US labour market, pushing the economy into recession."
The analysts added: “This is a very different tone from the generally upbeat nature of the US activity data, which saw the consensus GDP forecast for 2025 rise to an all-time high over the past year. The theme of American exceptionalism may have reached its peak.”
For its part, the Conference Board, commenting on its findings, said: “Pessimism about future employment prospects has deepened and reached a ten-month high.”
Elon Musk's Policies Threaten US Jobs
The deteriorating US employment outlook coincides with the job purge carried out by Elon Musk in federal institutions under the DOGE program, which seeks to cut spending and make the government more efficient. At the same time, the cost-cutting campaign raises expectations that the Trump administration will achieve its goal of curbing and then reducing the country's growing debt burden. An early negative side effect of these efforts is weak growth and the end of the US exceptionalism trade, which is inherently deflationary.
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The GBP/USD pair rose 2.0% in February 2025 to reverse its trend and overcome the 1.0% decline recorded in January to end four consecutive months of declines and warn against profit-taking after its recent gains.
However, analysts at Berenberg warn that concerns about the US economy are overblown. “We do not believe that the recent negative surprise in macroeconomic data and DOGE-led job cuts justify concerns about US economic growth. We expect the economy to grow above trend in 2025, with the labour market remaining healthy despite slower employment growth,” they said in a special analysis.
They expect total layoffs led by the US Department of Government Efficiency to reach 300,000 by the end of the year, which would reduce non-farm payrolls by up to 30,000 jobs per month. Some experts believe that this should not significantly affect the US labour market. In general, if this is true, the wave of US dollar weakness will break in the coming weeks, suggesting that the GBP/USD rise has its limits.
Upcoming Targets for GBP/USD:
According to recent trades and through the daily chart, the GBP/USD pair maintains positive momentum and there is now room to push towards the resistance levels of 1.2770 and 1.2820, which may be the final target for the current upward rebound. Meanwhile, the technical indicators will then move to strong overbought levels. On the other hand, and in the same time frame, the bears' success in pushing the currency pair below the support level of 1.2580 is a strong and clear threat to the current upward correction.
Technical Analysis for the GBP/USD pair today:
The GBP/USD pair will be affected by the results of a package of US economic data, most notably the announcement of GDP growth, the number of weekly jobless claims, and US durable goods orders. Furthermore, this is in addition to investors' sentiment regarding risk appetite or not.
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