- GBP/USD trades at its highest level in three weeks on Friday.
- Technical buyers could remain interested in case the pair clears 1.2900.
- The risk perception could drive the US Dollar's valuation in the absence of high-impact data releases.
GBP/USD preserves its bullish momentum and trades at its highest level in three weeks slightly below 1.2900 in the European session on Friday. In the absence of high-impact data releases, the risk perception could impact the pair's action in the second half of the day.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.63% | -1.04% | 1.40% | -0.14% | -0.95% | -0.36% | 0.47% | |
| EUR | 0.63% | -0.38% | 2.03% | 0.49% | -0.43% | 0.27% | 1.14% | |
| GBP | 1.04% | 0.38% | 2.68% | 0.88% | -0.05% | 0.65% | 1.52% | |
| JPY | -1.40% | -2.03% | -2.68% | -1.50% | -2.38% | -1.74% | -0.94% | |
| CAD | 0.14% | -0.49% | -0.88% | 1.50% | -0.86% | -0.22% | 0.62% | |
| AUD | 0.95% | 0.43% | 0.05% | 2.38% | 0.86% | 0.70% | 1.55% | |
| NZD | 0.36% | -0.27% | -0.65% | 1.74% | 0.22% | -0.70% | 0.86% | |
| CHF | -0.47% | -1.14% | -1.52% | 0.94% | -0.62% | -1.55% | -0.86% |
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).
On Thursday, the data from the US showed that the weekly Initial Jobless Claims declined by 7,000 to 227,000. Additionally, Retail Sales rose by 1% in July, surpassing the market expectation for an increase of 0.3%. Upbeat data releases provided a boost to the USD and caused GBP/USD to edge lower toward 1.2800.
As risk flows started to dominate the financial markets following the Wall Street's opening bell on Thursday, however, GBP/USD regained its traction and closed the day in positive territory.
July Housing Starts and Building Permits data will be featured in the US economic calendar alongside the University of Michigan's preliminary Consumer Sentiment Index for August. Investors are likely to ignore these figures and stay focused on the risk perception.
At the time of press, US stock index futures were up between 0.15% and 0.3%. A bullish opening in Wall Street could hurt the USD and allow GBP/USD to stretch higher. It's also worth mentioning that profit-taking and week-end flows could cause inter-market correlations to weaken heading into the weekend.
GBP/USD Technical Analysis
1.2900 (Fibonacci 61.8% retracement of the latest downtrend) aligns as immediate resistance before 1.2950 (Fibonacci 78.6% retracement) and 1.3000 (psychological level, static level).
On the downside, first support is located at 1.2850-1.2840 (Fibonacci 50% retracement, 200-period Simple Moving Average (SMA)) ahead of 1.2800 (100-period SMA, Fibonacci 38.2% retracement) and 1.2760 (Fibonacci 23.6% 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.
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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.