The GBP/USD outlook leans bearish, as the greenback started strong amid expected fewer rate cuts this year. At the same time, market participants expect a solid performance in the US economy in 2025.The pound collapsed on Thursday, losing about 1.16% of its value. The decline came as traders adjusted to a slight divergence in policy outlooks between the Federal Reserve and the Bank of England. Markets expect only 45-bps of rate cuts in the US this year. On the other hand, the Bank of England might lower borrowing costs by 60-bps this year. This divergence is putting pressure on the pound. At the December meeting, the Fed changed its outlook for rate cuts from aggressive to gradual, boosting US Treasury yields and the dollar. Meanwhile, although BoE policymakers remained cautious towards the end of 2024, data revealed a slowdown in the economy that could lead to a more dovish stance this year. Elsewhere, the US economy remained resilient in the last quarter of 2024. Furthermore, with Trump taking office this month, analysts predict more solid growth and higher inflation that will likely support the greenback. GBP/USD key events today
GBP/USD technical outlook: Bears record new lows below 1.2400 
GBP/USD 4-hour chartOn the technical side, the GBP/USD price has broken below the 1.2400 key support level after a steep decline from the 30-SMA. At the same time, the RSI has dipped below 30 into the oversold region. Therefore, bearish momentum is strong. Moreover, the price has made a lower low, confirming a continuation of the previous downtrend. Initially, bears were in the lead as the price made lower lows and highs and traded below the 30-SMA. However, bears got exhausted when they reached the 1.2500 support level. As a result, GBP/USD entered a period of consolidation with support at the 1.2500 level and resistance at 1.2601. However, bears soon regained momentum and broke below the range support to make a new low. At the moment, the price is retesting the 1.2500 level as resistance. If it holds, the downtrend will continue. More By This Author:USD/CAD Forecast: Loonie Faces Stormy Skies AheadGBP/USD Forecast: Dollar Surges Amid Hawkish FOMCUSD/JPY Outlook: Fed Signals Fewer 2025 Cuts, BoJ Stays Silent
