- GBP/USD rebounds from multi-week lows but stays below 1.2700.
- Pound Sterling could struggle to extend recovery unless risk mood improves.
- The economic calendar will not offer any high-tier data releases on Monday.
Following Thursday's sharp decline, GBP/USD stretched lower and touched its weakest level since mid-May near 1.2620 on Friday. After ending the week in negative territory, GBP/USD stages a correction and trades above 1.2650 on Monday.
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 weakest against the Australian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.15% | 0.16% | 1.31% | -0.47% | -0.47% | 0.14% | 0.25% | |
EUR | 0.15% | 0.34% | 1.50% | -0.32% | -0.40% | 0.34% | 0.41% | |
GBP | -0.16% | -0.34% | 1.23% | -0.66% | -0.76% | -0.04% | 0.09% | |
JPY | -1.31% | -1.50% | -1.23% | -1.66% | -1.76% | -1.01% | -0.99% | |
CAD | 0.47% | 0.32% | 0.66% | 1.66% | -0.06% | 0.62% | 0.75% | |
AUD | 0.47% | 0.40% | 0.76% | 1.76% | 0.06% | 0.80% | 0.86% | |
NZD | -0.14% | -0.34% | 0.04% | 1.01% | -0.62% | -0.80% | 0.13% | |
CHF | -0.25% | -0.41% | -0.09% | 0.99% | -0.75% | -0.86% | -0.13% |
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) gathered strength heading into the weekend after the preliminary S&P Global Manufacturing and Services PMI for June showed that the business activity in the US private sector continued to expand at a robust pace.
Early Monday, the USD stays under modest bearish pressure amid improving risk mood and helps GBP/USD hold its ground.
The US economic docket will feature the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Business Index. These data, however, unlikely to trigger a noticeable market reaction. Hence, investors are likely to remain focused on risk perception.
At the time of press, Dow Futures were up 0.3%, while Nasdaq Futures were down 0.1% A mixed action in Wall Street could make it difficult for GBP/USD to continue to stretch higher.
GBP/USD Technical Analysis
GBP/USD fell below the 100-day Simple Moving Average, currently located at 1.2640, on Friday but closed the week above this level, reflecting sellers' hesitancy. Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart recovered toward 50.
On the upside, the 200-period SMA on the 4-hour chart aligns as immediate resistance at 1.2700 ahead of 1.2720-1.2730 (Fibonacci 23.6% retracement of the latest uptrend, 100-period SMA) and 1.2800 (psychological level, static level).
In case GBP/USD falls below 1.2640 and starts using that level as resistance, 1.2600 (psychological level, static level) and 1.2580 (Fibonacci 50% retracement) could be seen as next bearish targets.
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: Next on the downside comes 0.6500
Further gains in the US Dollar kept the price action in commodities and the risk complex depressed on Tuesday, motivating AUD/USD to come close to the rea of the November low near 0.6500.
EUR/USD: No respite to the sell-off ahead of US CPI
The rally in the Greenback remained well and sound for yet another session, weighing on the risk-linked assets and sending EUR/USD to new 2024 lows in the vicinity of 1.0590 prior to key US data releases.
Gold struggles to retain the $2,600 mark
Following the early breakdown of the key $2,600 mark, prices of Gold now manages to regain some composure and reclaim the $2,600 level and beyond amidst the persistent move higher in the US Dollar and the rebound in US yields.
SOL Price Forecast: Solana bulls maintain $250 target as Binance lists ACT and PNUT
Solana price retraced 7% from $225 to $205 on Tuesday, halting a seven-day winning streak that saw SOL become the third-largest cryptocurrency by market capitalization.
Five fundamentals: Fallout from the US election, inflation, and a timely speech from Powell stand out Premium
What a week – the US election lived up to their hype, at least when it comes to market volatility. There is no time to rest, with politics, geopolitics, and economic data promising more volatility ahead.
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.