- GBP/USD edges higher following a quiet Asian session on Wednesday.
- 1.2600 aligns as next key resistance for the pair.
- A soft PCE inflation data from the US could help GBP/USD push higher.
After failing to clear 1.2600 during the European trading hours on Tuesday, GBP/USD lost its traction and closed the day flat. Once again, the pair edges higher toward 1.2600 in the European session on Wednesday as investors gear up for the US data dump ahead of the Thanksgiving holiday.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.88% | -0.51% | -1.43% | 0.73% | 0.27% | -0.48% | -0.93% | |
| EUR | 0.88% | 0.20% | -1.17% | 1.01% | 1.08% | -0.20% | -0.64% | |
| GBP | 0.51% | -0.20% | -1.36% | 0.81% | 0.88% | -0.39% | -0.83% | |
| JPY | 1.43% | 1.17% | 1.36% | 2.19% | 2.17% | 1.02% | 0.69% | |
| CAD | -0.73% | -1.01% | -0.81% | -2.19% | -0.30% | -1.19% | -1.67% | |
| AUD | -0.27% | -1.08% | -0.88% | -2.17% | 0.30% | -1.26% | -1.70% | |
| NZD | 0.48% | 0.20% | 0.39% | -1.02% | 1.19% | 1.26% | -0.45% | |
| CHF | 0.93% | 0.64% | 0.83% | -0.69% | 1.67% | 1.70% | 0.45% |
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).
In the minutes of its November policy meeting, the Federal Reserve (Fed) noted that officials expressed mixed views regarding how much interest rates might need to be cut.
According to the publication, some participants said the Fed could pause easing and hold the policy rate at a restrictive level if inflation remained elevated, while others noted that easing could be accelerated if labor market weakened or economic activity faltered.
In the early American session, the US Bureau of Economic Analysis (BEA) will publish its second estimate of the annualized Gross Domestic Product (GDP) growth for the third quarter. Later in the day, the BEA will release the Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's (Fed) preferred gauge of inflation, for October.
Investors expect the monthly core PCE Price Index to increase 0.3% in October. A stronger-than-forecast increase could boost the USD with the immediate reaction and make it difficult for GBP/USD to push higher. On the other hand, a print below analysts' estimate could open the door for an extended recovery in the pair.
The US economic docket will also offer other data releases, including the US Department of Labor's weekly Initial Jobless Claims and the US Census Bureau's Durable Goods Orders figures for October.
GBP/USD Technical Analysis
GBP/USD trades near 1.2600, where the 50-period Simple Moving Average (SMA) on the 4-hour chart meets the upper limit of the descending regression channel, and the Relative Strength Index (RSI) stays slightly above 50, reflecting a bullish tilt in the near-term outlook.
In case GBP/USD clears 1.2600 and confirms this level as support, it could meet next resistance at 1.2660 (static level) before 1.2700 (round level, static level). On the downside, 1.2560 (20-period SMA) could act as interim support before 1.2500 (static level, mid-point of the descending channel).
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, also known as ‘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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