GBP/USD Forecast: Pound Sterling bulls retain control on Monday
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UPGRADE- GBP/USD trades in positive territory above 1.3150 in the European session.
- The Fed and the BoE will announce policy decisions later this week.
- Next resistance for the pair is located at 1.3200.
GBP/USD gathers bullish momentum in the European session on Monday and trades at its highest level in over a week above 1.3150. The pair's near-term technical outlook suggests that the bullish bias remains unchanged. Investors, however, could move to the sidelines ahead of the Federal Reserve's (Fed) and the Bank of England's (BoE) monetary policy announcements later in the week.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.42% | -0.43% | -0.67% | -0.15% | -0.41% | -0.42% | -0.44% | |
| EUR | 0.42% | -0.06% | -0.28% | 0.24% | -0.05% | -0.06% | -0.05% | |
| GBP | 0.43% | 0.06% | -0.31% | 0.31% | 0.01% | 0.02% | 0.01% | |
| JPY | 0.67% | 0.28% | 0.31% | 0.54% | 0.33% | 0.28% | 0.19% | |
| CAD | 0.15% | -0.24% | -0.31% | -0.54% | -0.34% | -0.28% | -0.26% | |
| AUD | 0.41% | 0.05% | -0.01% | -0.33% | 0.34% | -0.01% | -0.01% | |
| NZD | 0.42% | 0.06% | -0.02% | -0.28% | 0.28% | 0.00% | -0.00% | |
| CHF | 0.44% | 0.05% | -0.01% | -0.19% | 0.26% | 0.01% | 0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The US Dollar (USD) stays under selling pressure after weakening against its major rivals in the second half of the previous week.
The Wall Street Journal reporter Nick Timiraos, who is widely seen as a “Fed insider,” wrote last week that the size of the Fed’s rate cut at the September policy meeting will be a close call. Additionally, the data published by the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) rose at a softer pace than expected in August.
According go the CME FedWatch Tool, markets are currently pricing in a nearly 60% probability of a 50 basis points Fed rate cut this Wednesday.
Ahead of the BoE and the Fed policy announcements, the UK's Office for National Statistics will release the Consumer Price Index (CPI) data for August in the European morning on Wednesday.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart climbed above 60 and GBP/USD closed the last two 4-hour candles above the 100-period Simple Moving Average (SMA), highlighting a buildup of bullish momentum.
On the upside, 1.3200 (static level) aligns as immediate resistance before 1.3260 (end-point of the latest uptrend) and 1.3300 (static level).
Looking south, first support could be spotted at 1.3140-1.3130 (100-period SMA, Fibonacci 23.6% retracement) before 1.3100 (static level) and 1.3040 (Fibonacci 38.2% retracement).
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/USD trades in positive territory above 1.3150 in the European session.
- The Fed and the BoE will announce policy decisions later this week.
- Next resistance for the pair is located at 1.3200.
GBP/USD gathers bullish momentum in the European session on Monday and trades at its highest level in over a week above 1.3150. The pair's near-term technical outlook suggests that the bullish bias remains unchanged. Investors, however, could move to the sidelines ahead of the Federal Reserve's (Fed) and the Bank of England's (BoE) monetary policy announcements later in the week.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.42% | -0.43% | -0.67% | -0.15% | -0.41% | -0.42% | -0.44% | |
| EUR | 0.42% | -0.06% | -0.28% | 0.24% | -0.05% | -0.06% | -0.05% | |
| GBP | 0.43% | 0.06% | -0.31% | 0.31% | 0.01% | 0.02% | 0.01% | |
| JPY | 0.67% | 0.28% | 0.31% | 0.54% | 0.33% | 0.28% | 0.19% | |
| CAD | 0.15% | -0.24% | -0.31% | -0.54% | -0.34% | -0.28% | -0.26% | |
| AUD | 0.41% | 0.05% | -0.01% | -0.33% | 0.34% | -0.01% | -0.01% | |
| NZD | 0.42% | 0.06% | -0.02% | -0.28% | 0.28% | 0.00% | -0.00% | |
| CHF | 0.44% | 0.05% | -0.01% | -0.19% | 0.26% | 0.01% | 0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The US Dollar (USD) stays under selling pressure after weakening against its major rivals in the second half of the previous week.
The Wall Street Journal reporter Nick Timiraos, who is widely seen as a “Fed insider,” wrote last week that the size of the Fed’s rate cut at the September policy meeting will be a close call. Additionally, the data published by the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) rose at a softer pace than expected in August.
According go the CME FedWatch Tool, markets are currently pricing in a nearly 60% probability of a 50 basis points Fed rate cut this Wednesday.
Ahead of the BoE and the Fed policy announcements, the UK's Office for National Statistics will release the Consumer Price Index (CPI) data for August in the European morning on Wednesday.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart climbed above 60 and GBP/USD closed the last two 4-hour candles above the 100-period Simple Moving Average (SMA), highlighting a buildup of bullish momentum.
On the upside, 1.3200 (static level) aligns as immediate resistance before 1.3260 (end-point of the latest uptrend) and 1.3300 (static level).
Looking south, first support could be spotted at 1.3140-1.3130 (100-period SMA, Fibonacci 23.6% retracement) before 1.3100 (static level) and 1.3040 (Fibonacci 38.2% retracement).
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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