GBP/USD declined to 1.2495 on Tuesday, extending losses after above-forecast U.S. ISM non-manufacturing PMI and JOLTS job openings data reduced market expectations for Fed rate cuts in early 2025. The strong U.S. data drove dollar gains, while sterling remained pressured by dovish expectations for the BoE’s February meeting. With limited UK data until next week’s output figures, traders are focusing on upcoming U.S. releases, including jobless claims and payrolls, for further clues about Fed policy.

Technical indicators highlight bearish momentum for GBP/USD. Support is firmly established at 1.2481, Tuesday’s low, with further levels at 1.2402 (30-day Bollinger Band) and the January 2 low of 1.2353. On the upside, resistance lies at 1.2508 (200-hour moving average), 1.2575 (January 7 high), and 1.2582 (50% retracement of the 1.2811-1.2353 drop). A failure to reclaim resistance levels could leave sterling vulnerable to further declines, especially if upcoming U.S. data strengthens the dollar.

The divergence in central bank policies remains a headwind for GBP/USD. Futures markets are pricing in a 68% probability of a BoE rate cut in February, while the Fed’s tone has turned less dovish, with no cuts expected until later in the year. UK inflation and U.S. inflation data on January 15 could provide a clearer directional signal, but for now, GBP/USD appears poised to test lower support levels, with a break below 1.2353 likely to accelerate bearish momentum.