On Friday, the Pound Sterling (GBP) surged to near 1.2400 against the US Dollar (USD), marking a significant gain for the British currency. The rise of GBP/USD comes as the US Dollar is on track to close the week with its highest losses in almost two months. The US Dollar Index (DXY), which measures the Greenback’s performance against six major currencies, dropped to around 107.60, its lowest level in over a month.

This sharp decline in the USD follows remarks by former US President Donald Trump at the World Economic Forum (WEF) on Thursday. Trump, calling for immediate interest rate cuts by the Federal Reserve (Fed), stated, “With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world.” His comments have come just days before the Fed’s monetary policy meeting on January 29, where it is widely expected to pause the rate-hike cycle and leave interest rates unchanged between 4.25% and 4.50%.

Despite Trump’s push for rate cuts, the Fed is unlikely to alter its course, as it is an independent body focused on maintaining price stability and full employment. Meanwhile, the market will closely monitor the release of the preliminary S&P Global PMI data for January, which is expected to show that US private business activity remained steady.

In the UK, the Pound Sterling has held steady against its major peers, except the US Dollar, ahead of the release of the UK’s S&P Global/CIPS PMI data for January at 09:30 GMT. Analysts expect the Composite PMI to show a slight contraction, which could fuel market expectations for a rate cut by the Bank of England (BoE) in February.

From a technical perspective, GBP/USD broke above its 20-day Exponential Moving Average (EMA), trading around 1.2363, indicating a shift in momentum. The 14-day Relative Strength Index (RSI) rebounded to 50.00, signaling the end of bearish momentum. Key support levels lie at 1.2100 (January 13 low) and 1.2050 (October 2023 low), while resistance is seen at the 50-day EMA near 1.2515.

Also Read: GBP/USD Soars Toward 1.2800 as Fed Rate Cut Bets Fuel Pound Sterling’s Strength

As the market awaits key economic data, the Pound Sterling’s performance remains tied to both domestic and global developments, with the USD facing downward pressure.

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