GBP/USD Outlook: Pound Holds Up Near 1.3560 as UK Data Supports Bullish Bias

Previously released data on the M4 aggregate, which reflects the total value of liquid money held by the population, showed an increase of 0.8% after a –0.2% decline a month earlier. In nominal terms, the indicator reached £3.200 trillion, compared with £3.176 trillion in October. Meanwhile, consumer lending provided by the Bank of England rose to £2.077 billion from £1.713 billion, while mortgage borrowing increased to £4.49 billion from £4.16 billion. These figures point to relative financial resilience among households and sustained demand for borrowing despite tight monetary conditions. Net lending to individuals also rose sharply, reaching £6.600 billion for the first time since September, up from £5.400 billion a month earlier, supporting expectations of a pause in the dovish cycle at next month’s meeting. Tomorrow at 11:30 (GMT+2), the pound could receive additional support if UK services PMI data exceed analysts’ expectations. The index is currently forecast to accelerate to 52.1 points from 51.3 in November, while the composite index may rise to 52.1 from 51.2.

As for the US dollar, its quotes are showing downward movement today, with the USDX trading near 97.90 after a brief correction. This decline may intensify following the release of S&P Global business activity data at 16:45 (GMT+2), where a slowdown from 54.1 to 52.9 points is expected. The report will help assess the outlook for economic activity in January and February. Starting Wednesday, markets will also focus on a series of US labor market releases, including nonfarm employment data, JOLTS job openings, and wage statistics, which are set to play a key role in shaping the Federal Reserve’s monetary policy decision at the January 29 meeting. Expectations of a potential rate cut are based on forecasts of economic growth and labor market cooling, and if these assumptions are not confirmed, current CME FedWatch Tool estimates—indicating an 83.9% probability of rates remaining in the 3.50–3.75% range—are likely to prove accurate.

Support and resistance levels

On the daily chart, the pair is trading slightly above the support line of the ascending channel with dynamic boundaries at 1.3700–1.3400.

Technical indicators have long since turned higher and continue to signal long positions. Fast EMAs on the Alligator indicator are slightly above the signal line and moving further away from it, while the Awesome Oscillator histogram is forming rising bars in the positive zone.

Support levels: 1.3390, 1.3130.

Resistance levels: 1.3640, 1.3900.

Trading scenarios and GBP/USD outlook

Long positions can be considered after a sustained breakout above 1.3640, with a target at 1.3900 and a stop-loss at 1.3540. Time horizon: 7 days or more.

Short positions can be considered after a sustained move below 1.3390, with a target at 1.3130 and a stop-loss at 1.3510.