Forex Analysis & Reviews: 31.01.2025 - Forecast for GBP/USD on...

31.01.2025 01:53 PM

Forecast for GBP/USD on January 31, 2025

On the hourly chart, GBP/USD continued its sideways movement on Thursday, trading between two key zones. There were no valid trading signals on Tuesday, Wednesday, or Thursday, as the price did not approach any of the important levels that have defined the range over the past three days.

The wave structure is relatively clear. The last completed downward wave did not break the previous low, while the last upward wave surpassed the prior peak. This suggests that a bullish trend may be forming. However, the waves have been small and inconsistent, making it difficult to confidently classify the current trend as a sustained bullish move that could continue for at least a few weeks.

Thursday's fundamental background was relatively weak. According to the latest U.S. Q4 GDP report, the economy grew by 2.3% q/q, missing the expected 2.6%. Meanwhile, initial jobless claims came in at 207K, better than the 220K forecast.

These reports provided some support for the bulls, but the British pound did not see a significant upward move, mainly because the euro had stronger reasons to decline—and GBP/USD often moves in tandem with EUR/USD. Ideally, the euro should have fallen, and the pound should have risen, but traders struggled to determine a clear direction.

Today, the sideways movement could persist, as no significant UK economic releases are scheduled, and the British pound has lacked strong domestic catalysts throughout the week. However, the pound could come under pressure in the coming days, as the Bank of England is preparing to cut interest rates next week. This could align the bearish sentiment for both the euro and the pound, potentially leading to a broader market sell-off.

On the 4-hour chart, GBP/USD continues to rise within a downward trend channel. A rejection from the upper boundary of this channel could trigger a bearish reversal, pushing the pair toward the 100.0% Fibonacci level at 1.2299. Conversely, a breakout above the trend channel could drive bears out of the market, potentially signaling a shift toward bullish control.

A bullish divergence has formed on the CCI indicator, yet buyers remain hesitant to initiate a strong rally.

Commitments of Traders (COT) Report:

The latest COT report indicates that the non-commercial traders' sentiment has turned increasingly bearish. Long positions decreased by 4,861 and short positions increased by 3,834. The balance has shifted in favor of the bears, with 84K short positions versus 75K long positions.

Over the past three months, long positions fell from 161K to 75K and short positions rose from 67K to 84K.

These trends suggest that institutional traders are consistently reducing their long exposure or increasing short positions, as most bullish factors for the pound have already been priced in.

While technical analysis currently signals upward potential, corrections remain necessary, and the broader trend could favor further GBP weakness over time.

Key Economic Events: U.S. Data to Watch

13:30 UTC – U.S. Core PCE Price Index
13:30 UTC – U.S. Personal Income & Spending

While today's economic calendar includes only two notable releases, their impact on market sentiment could be limited.

Trading Recommendations for GBP/USD

Short positions are valid if the price breaks below the ascending trend channel on the hourly chart. Selling opportunities were also available upon a rejection from the 1.2488–1.2508 zone, with targets at 1.2363–1.2370—these trades can remain open. Buying opportunities can be considered if the price rebounded from the 1.2363–1.2370 zone, targeting 1.2488–1.2508.

Fibonacci Levels:

Hourly chart: 1.3000–1.3432
4-hour chart: 1.2299–1.3432

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*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

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