Cooling labour market and business struggles add to pressure on GBPUSD

The GBPUSD pair remains in a sideways range, with the price currently at 1.2636. Discover more in our analysis for 26 February 2025.

GBPUSD forecast: key trading points

• Swati Dhingra called for more aggressive BoE rate cuts
• UK inflation was 3.0% in January, above the 2.0% target
• A cooling labour market adds to arguments in favour of BoE interest rate cuts
• GBPUSD forecast for 26 February 2025: 1.2485

Fundamental analysis

The GBPUSD rate is declining after rebounding from the 1.2665 resistance level. The pound remains under pressure as BoE Monetary Policy Committee member Swati Dhingra called for more aggressive rate cuts, citing low consumption and persistent inflationary pressures.

Dhingra noted that economic activity in the UK remains subdued, and inflation, while rising, is not having a significant impact on consumption. Inflation reached 3.0% in January and could rise to 3.7% in Q3 according to the Bank of England forecasts, almost double the 2.0% target.

A cooling labour market and small business difficulties strengthen the case for an interest rate cut, potentially putting pressure on the GBPUSD rate in the short term.

GBPUSD technical analysis

The GBPUSD rate is plunging after rebounding from the upper boundary of the ascending channel. According to the GBPUSD forecast for today, the pair still has the potential to form a bearish impulse, supported by the divergence on the Stochastic Oscillator. A breakout below the support level and a price consolidation below 1.2600 could increase the pressure from the sellers and open the way for a further decline to the 1.2485 target. The bearish scenario will remain relevant if the price consolidates below 1.2680.

Summary

The pound sterling remains under short-term pressure due to the weakness of the UK economy and a possible rate cut. The GBPUSD technical analysis indicates that a bearish impulse could form with a possible move towards 1.2485, provided the price remains below 1.2680.