- GBP/USD declines toward 1.2900 after posting large losses on Thursday.
- Safe-haven flows dominate financial markets in the European session on Friday.
- The near-term technical outlook points to a buildup of bearish momentum.
After closing in negative territory on Thursday, GBP/USD stays under bearish pressure and falls toward 1.2900 in the European session on Friday, as the US Dollar (USD) benefits from the negative shift seen in risk sentiment.
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 weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | 0.59% | -0.49% | 0.53% | 1.40% | 1.40% | -0.58% | |
| EUR | -0.22% | 0.40% | -0.51% | 0.50% | 1.21% | 1.38% | -0.61% | |
| GBP | -0.59% | -0.40% | -0.55% | 0.11% | 0.80% | 0.92% | -1.15% | |
| JPY | 0.49% | 0.51% | 0.55% | 1.03% | 1.67% | 1.87% | -0.30% | |
| CAD | -0.53% | -0.50% | -0.11% | -1.03% | 0.78% | 0.86% | -1.15% | |
| AUD | -1.40% | -1.21% | -0.80% | -1.67% | -0.78% | 0.16% | -1.83% | |
| NZD | -1.40% | -1.38% | -0.92% | -1.87% | -0.86% | -0.16% | -1.99% | |
| CHF | 0.58% | 0.61% | 1.15% | 0.30% | 1.15% | 1.83% | 1.99% |
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).
Wall Street's main indexes turned south after the opening bell on Thursday, helping the USD find demand in the second half of the day. Early Friday, the data published by the UK's Office for National Statistics showed that Retail Sales declined 1.2% on a monthly basis in June. This reading followed the 2.9% increase recorded in May and came in weaker than analysts' forecast of -0.4%, further weighing on Pound Sterling.
The economic calendar will not offer any high-impact data releases ahead of the weekend. Hence, the risk perception could continue to impact GBP/USD's action.
At the time of press, US stock index futures were down between 0.3% and 0.4%. In the meantime, the UK's FTSE 100 Index is down 0.6% on the day.
Investors will also pay close attention to comments from Federal Reserve (Fed) officials before the Fed blackout period starts this Saturday. Currently, the CME Group FedWatch Tool shows that markets are nearly fully pricing in a 25 basis points rate cut in September. This positioning suggests that the USD does not have a lot of room on the downside, even if Fed officials voice support for a rate reduction in September.
GBP/USD Technical Analysis
GBP/USD dropped below the lower limit of the ascending regression channel coming from early July and the Relative Strength Index (RSI) indicator on the 4-hour chart fell below 40, reflecting a buildup of bearish pressure.
On the downside, 1.2900 (psychological level, static level) aligns as immediate support before 1.2875 (Fibonacci 38.2% retracement) and 1.2820-1.2830 (100-period Simple Moving Average (SMA) on the 4-hour chart, Fibonacci 50% retracement).
1.2930 (50-period SMA) could be seen as first resistance before 1.2960 (lower limit of the ascending channel) and 1.3000 (psychological level, static 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 stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
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.