- GBP/USD trades in a narrow channel above 1.2500 in the European session.
- The 200-day SMA forms key pivot level at 1.2540.
- The UK's ONS will release employment data on Tuesday.
After fluctuating wildly in the second half of the previous week, GBP/USD seems to have stabilized above 1.2500 at the beginning of the new week. The near-term technical outlook fails to offer directional clues, while the pair struggles to pull away from the 200-day Simple Moving Average (SMA), currently located at 1.2540.
British Pound PRICE Last 7 days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | -0.20% | -1.81% | -0.03% | -0.09% | -0.05% | -0.21% | |
| EUR | -0.14% | -0.25% | -1.83% | -0.10% | -0.02% | -0.11% | -0.25% | |
| GBP | 0.20% | 0.25% | -1.62% | 0.15% | 0.22% | 0.13% | 0.00% | |
| JPY | 1.81% | 1.83% | 1.62% | 1.75% | 1.72% | 1.77% | 1.61% | |
| CAD | 0.03% | 0.10% | -0.15% | -1.75% | -0.17% | -0.00% | -0.11% | |
| AUD | 0.09% | 0.02% | -0.22% | -1.72% | 0.17% | -0.11% | -0.15% | |
| NZD | 0.05% | 0.11% | -0.13% | -1.77% | 0.00% | 0.11% | -0.11% | |
| CHF | 0.21% | 0.25% | -0.00% | -1.61% | 0.11% | 0.15% | 0.11% |
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 dovish tone seen in the Bank of England's (BoE) policy statement following the decision to maintain the bank rate at 5.25% on Thursday made it difficult for Pound Sterling to find demand. The US Dollar (USD) selloff that was triggered by disappointing US data later in the day, however, helped GBP/USD find support and allowed the pair to rise above 1.2500.
BoE Governor Andrew Bailey said that he was optimistic that things were moving in the right direction for a rate cut, adding that they had encouraging news on inflation.
Ahead of the weekend, several Federal Reserve (Fed) officials delivered hawkish remarks and capped GBP/USD upside. Minneapolis Fed President Neel Kashkari repeated his doubts over the restrictiveness of the policy and noted that he can't rule out the possibility of another rate hike this year. Additionally, Fed Board of Governors member Michelle W. Bowman said on Friday that she doesn't see rate cuts as warranted this year, adding that she would want to see a number of months of better inflation data.
The economic calendar will not offer any high-impact data releases on Monday. Fed Vice Chair of the Board of Governors Phillip Jefferson and Cleveland Fed President Loretta Mester are scheduled to speak in the early American session. In case these officials stick to a similarly hawkish language, GBP/USD could stay on the back foot. In the early European morning on Tuesday, the UK's Office for National Statistics will release labor market data.
GBP/USD Technical Analysis
The 200-day Simple Moving Average (SMA) stays intact as near-term resistance at 1.2540. In case GBP/USD rises above that level and confirms it as support, 1.2590-1.2600 (Fibonacci 50% retracement of the latest downtrend, psychological level) could be seen as next resistance before 1.2635 (May 3 high).
On the downside, 1.2500 (psychological level, 100-period SMA on the 4-hour chart) aligns as first support before 1.2450 (Fibonacci 23.6% retracement) and 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
AUD/USD plunges to near 0.6400 as weak Aussie GDP boosts RBA dovish bets
Disappointing data results from key fundamentals in Australia weighed heavily on the Aussie Dollar, sending AUD/USD to fresh four-month lows in the boundaries of the key contention zone at 0.6400.
EUR/USD holds near 1.0500 ahead of Powell speech
EUR/USD managed to clinch its second day in a row of gains, extending the recent breakout of the 1.0500 mark in response to the inconclusive tone in the US Dollar ahead of key US data releases later in the week.
Gold advances to $2,650 area as US yields edge lower
Following a consolidation phase near $2,640, Gold gains traction and rises to the $2,650 area. The benchmark 10-year US Treasury bond yield pushes lower after weak macroeconomic data releases from the US, helping XAU/USD stretch higher.
Crypto Today: Ethereum price crosses $3.7K as Tron and Avalanche lead DeFi Market rally
Ethereum price crossed the $3,700 mark as it outperformed Bitcoin on Wednesday amid positive tailwinds from news reports that the Securities & Exchange Commission (SEC) could approve staking for crypto ETFs in the US.
Four out of G10
In most cases, the G10 central bank stories for December are starting to converge on a single outcome. Here is the state of play: Fed: My interpretation of Waller’s speech this week is that his prior probability for a December cut was around 75% before the data.
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.