- GBP/USD recovers toward 1.2500 after touching a new five-month low on Friday.
- The pair could extend its rebound in case risk mood continues to improve.
- Investors keep a close eye on headlines surrounding the Israel-Iran conflict.
GBP/USD rebounds early Monday and advances above 1.2450 after slumping to its lowest level since November at 1.2426 ahead of the weekend. The technical outlook suggests that the bearish bias remains intact but a de-escalation of geopolitical tensions could help the pair extend its recovery.
Investors sought refuge ahead of the weekend on reports of Iran preparing an attack on Israel in retaliation to the suspected Israeli attack on Iran’s consulate in Damascus on April 1. In turn, the US Dollar capitalized on safe-haven flows, triggering a sharp decline in GBP/USD in the late American session.
Pound Sterling price in the last 7 days
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies in the last 7 days. Pound Sterling was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 1.59% | 1.15% | 0.98% | 1.35% | 1.40% | 1.10% | 1.03% | |
| EUR | -1.62% | -0.46% | -0.62% | -0.23% | -0.19% | -0.47% | -0.57% | |
| GBP | -1.16% | 0.46% | -0.16% | 0.21% | 0.26% | -0.05% | -0.12% | |
| CAD | -1.00% | 0.61% | 0.15% | 0.39% | 0.42% | 0.12% | 0.07% | |
| AUD | -1.37% | 0.23% | -0.23% | -0.39% | 0.04% | -0.24% | -0.34% | |
| JPY | -1.43% | 0.19% | -0.25% | -0.43% | -0.04% | -0.28% | -0.37% | |
| NZD | -1.11% | 0.49% | 0.05% | -0.13% | 0.26% | 0.31% | -0.08% | |
| CHF | -1.05% | 0.56% | 0.11% | -0.06% | 0.33% | 0.37% | 0.06% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Over the weekend, Iran launched an attack with drones, cruise missiles and ballistic missiles. Israeli military spokesman Rear Admiral Daniel Hagari said in a televised statement that only a small number of ballistic missiles reached Israel.
US President Joe Biden has reportedly told Israeli Prime Minister Benjamin Netanyahu that the US would not participate in any Israeli counter-offensive against Iran. Meanwhile, German Foreign Minister Annalena Baerbock said that Israel now should secure the 'defensive victory' and added that a further escalation of the conflict in the region should be prevented.
US stock index futures were last seen rising between 0.4% and 0.6% on the day. In case Wall Street's main indexes open in the positive territory and continue to push higher, the USD could have a hard time preserving its strength and allow GBP/USD to edge higher.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart rose above 30, suggesting that GBP/USD is staging a technical correction, while remaining bearish in the near term.
On the upside, 1.2500 (psychological level, static level) aligns as first resistance before 1.2560 (static level) and 1.2580 (200-day Simple Moving Average).
Static support seems to have formed at 1.2450 ahead of 1.2400 (static level, psychological level).
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds near 1.1100, looks to post small weekly gains
EUR/USD trades near 1.1100 in the American session on Friday. Although the risk-averse market atmosphere caps the pair's upside, dovish comments from Fed officials and the disappointing US jobs report help it hold its ground.
GBP/USD retreats to 1.3150 area after post-NFP spike
GBP/USD turns south and declines to 1.3150 area after spiking to 1.3240 in the early American session. The negative shift seen in risk mood following the US labor market data for August helps the US Dollar stay resilient against its peers and weighs on the pair.
Gold pulls away from near record highs, holds above $2,500
Gold came within a touching distance of a new all-time high near $2,530 as US Treasury bond yields turned south on disappointing US jobs data. The US Dollar's resilience amid a souring risk mood, however, caused XAU/USD to erase its daily gains.
Crypto today: Bitcoin, Ethereum, XRP tests key support, TRON network non-stablecoin activity hits new highs
Bitcoin, Ethereum, and XRP hover around key support levels after registering a steep correction earlier this week. TRON network’s stablecoin activity hit new highs following the release of SunPump.
Nonfarm Payrolls expected to show modest hiring rebound in August after July’s tepid report
The Nonfarm Payrolls report is forecast to show that the US economy added 160,000 jobs in August, after creating 114,000 in July. The Unemployment Rate is likely to dip to 4.2% in the same period from July’s 4.3% reading.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.