empty
31.01.2025 05:24 AM
Overview of the GBP/USD Pair on January 31: Jerome Powell Answered the Key Question!

This image is no longer relevant

The GBP/USD currency pair traded cautiously on Wednesday evening and throughout Thursday, despite several fundamental catalysts at play. This hesitation was largely due to the market receiving the information it had anticipated. On Wednesday evening, the Federal Reserve decided to keep the key interest rate unchanged. During the press conference, Jerome Powell affirmed that the Fed would not yield to suggestions from President Donald Trump. These concerns were at the forefront of investors' minds, and the responses provided were precisely what everyone expected.

It's important to note that President Trump has previously expressed his intention to pressure the Fed for interest rate cuts. During his first term, he frequently urged the Fed to lower rates, but Powell and his team maintained the central bank's independence in the face of his provocations. We expected that this situation would remain unchanged, although some doubts lingered. After all, Powell is not the Fed Chair indefinitely; Trump could have offered him an extension of his term in exchange for greater loyalty. However, as demonstrated, Powell appears uninterested in such arrangements. Consequently, the U.S. dollar has reaffirmed its potential to strengthen against competitors in 2025. On the other hand, the European Central Bank is likely to lower rates to 2% by summer, and the Bank of England, which has a meeting scheduled for next week, is preparing to implement up to four rate cuts.

In light of recent developments, it's important to note that the ongoing rise of the pound and the euro over the past three weeks is merely a corrective phase. We previously warned that a correction was on the horizon in the daily timeframe, and it was likely to be quite pronounced. Therefore, we wouldn't be surprised if GBP/USD continues to rise for several more weeks, or even longer. The pound could easily reach the 1.27–1.28 range based purely on these corrective movements. However, this upward trend will not change the overall technical outlook, nor will it be fundamentally justified.

The British economy remains as weak as the European economy, and the BoE has a much more dovish stance compared to the Fed. So, what is driving the strength of the pound? At this stage, the market seems to be weighing whether to continue the correction or resume the downtrend. We also have a trendline and the Ichimoku indicator that suggest the trend direction across all timeframes. Even on the hourly chart, it remains uncertain whether the three-week uptrend has come to an end.

Additionally, the BoE meeting is scheduled for next week. A more dovish stance from the central bank increases the likelihood that the pound's decline will continue without ever reaching the 1.27–1.28 range. While Donald Trump has certainly influenced the U.S. dollar, a correction was inevitable regardless. Observing the daily timeframes, even the current rise of the euro and the pound appears relatively weak. Thus, although Trump may have triggered the dollar's decline, the correction was bound to happen.

This image is no longer relevant

The average volatility of the GBP/USD pair over the last five trading days is 91 pips. For the pound/dollar pair, this value is considered "average." Therefore, on Friday, January 31, we expect movement within the range limited by the levels of 1.2367 and 1.2549. The higher linear regression channel remains directed downward, signaling a bearish trend. The CCI indicator entered the overbought area and formed a bearish divergence. A resumption of the downward trend is expected.

Nearest Support Levels:

S1 – 1.2451

S2 – 1.2390

S3 – 1.2329

Nearest Resistance Levels:

R1 – 1.2512

R2 – 1.2573

R3 – 1.2634

Trading Recommendations:

The GBP/USD currency pair is currently experiencing a medium-term downward trend. We do not recommend taking long positions at this time, as we believe that all factors supporting the British currency have already been factored into the market multiple times, and there are no new catalysts for growth.

If you are trading based solely on technical indicators, long positions could be considered if the price rises above the moving average, targeting levels at 1.2512 and 1.2549. However, sell orders are still more relevant, with targets set at 1.2207 and 1.2146, but now a firm consolidation below the moving average is required.

Explanation of Illustrations:

Linear Regression Channels help determine the current trend. If both channels are aligned, it indicates a strong trend.

Moving Average Line (settings: 20,0, smoothed) defines the short-term trend and guides the trading direction.

Murray Levels act as target levels for movements and corrections.

Volatility Levels (red lines) represent the likely price range for the pair over the next 24 hours based on current volatility readings.

CCI Indicator: If it enters the oversold region (below -250) or overbought region (above +250), it signals an impending trend reversal in the opposite direction.

Paolo Greco,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Stock market throws in towel

Trouble never comes alone. The S&P 500 plunged to its lowest levels since mid-January as Donald Trump reignited tariff threats. First, negative economic data from the US, then NVIDIA's earnings

Marek Petkovich 08:49 2025-02-28 UTC+2

What to Pay Attention to on February 28? A Breakdown of Fundamental Events for Beginners

Friday's economic calendar is packed with events, but none are particularly critical. In Germany, reports on unemployment, inflation, and retail sales will be released. While these figures are significant locally

Paolo Greco 06:52 2025-02-28 UTC+2

GBP/USD Pair Overview – February 28: Who Cares About the Economy When There's Trump?

The GBP/USD currency pair continues to rise gradually, even though there is no substantial reason for this movement this week. While the British pound has not experienced significant appreciation during

Paolo Greco 02:49 2025-02-28 UTC+2

EUR/USD Pair Overview – February 28: The European Union Awaits a New Economic Blow

The EUR/USD currency pair maintained its movement pattern on Thursday, continuing to trade within a sideways channel on the hourly timeframe for most of the day. Even the news that

Paolo Greco 02:49 2025-02-28 UTC+2

The Dollar Is Currently Facing Significant Challenges

Concerns about the state of the US economy are hindering bearish sentiment in the market for EUR/USD. According to Danske Bank, the major currency pair lacks serious catalysts to move

Marek Petkovich 23:34 2025-02-27 UTC+2

Yen Continues to Target Further Strengthening

The dollar received a significant boost on Thursday following the release of the second GDP estimate for Q4, which reported an economic growth rate of 2.3%. While this figure

Kuvat Raharjo 23:01 2025-02-27 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to trade lower today, falling to a two-week low around $2,880. A modest increase in U.S. Treasury yields is strengthening the U.S. dollar, helping it rebound from

Irina Yanina 11:27 2025-02-27 UTC+2

AUD/JPY: Analysis and Forecast

The AUD/JPY pair's rate is attempting to hold slightly above the 94.00 level, its lowest point since September 2024. Investors are increasingly confident that the Bank of Japan (BoJ) will

Irina Yanina 11:19 2025-02-27 UTC+2

The Market Lacks Momentum

NVIDIA's earnings report lacked the necessary spark, and the S&P 500 plunged after an initial rally. Meanwhile, Donald Trump's threat of imposing 25% tariffs on the European Union

Marek Petkovich 09:49 2025-02-27 UTC+2

Markets Are in a Pre-crisis State Due to Trump's Policies, With a Potential Decline in the EUR/USD Pair and a Rise in USD/CAD

Donald Trump continues to create confusion regarding tariff policies, which significantly impacts financial market dynamics. Recently, he postponed the implementation of previously announced tariffs for Canada and Mexico from March

Pati Gani 08:42 2025-02-27 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.