- GBP/USD fluctuates near 1.2550 following Monday's choppy action.
- The pair could extend its downtrend if 1.2500 support fails.
- On the upside, key resistance seems to have formed at 1.2600.
After briefly rising above 1.2600 on Monday, GBP/USD reversed its direction to close the day in the red. The pair declined to the 1.2500 area during the Asian trading hours on Monday but managed to recover toward 1.2550 by the European morning.
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 | -0.54% | -0.13% | 0.02% | 1.22% | 0.37% | 0.24% | -0.45% | |
| EUR | 0.54% | 0.25% | -0.05% | 1.17% | 0.84% | 0.24% | -0.51% | |
| GBP | 0.13% | -0.25% | -0.29% | 0.92% | 0.59% | 0.00% | -0.77% | |
| JPY | -0.02% | 0.05% | 0.29% | 1.22% | 0.80% | 0.34% | -0.30% | |
| CAD | -1.22% | -1.17% | -0.92% | -1.22% | -0.69% | -0.92% | -1.71% | |
| AUD | -0.37% | -0.84% | -0.59% | -0.80% | 0.69% | -0.59% | -1.35% | |
| NZD | -0.24% | -0.24% | -0.01% | -0.34% | 0.92% | 0.59% | -0.77% | |
| CHF | 0.45% | 0.51% | 0.77% | 0.30% | 1.71% | 1.35% | 0.77% |
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 came under heavy selling pressure at the start of the week and helped GBP/USD gather bullish momentum. News of Donald Trump selecting fund manager Scott Bessent as the US Treasury Secretary eased concerns over unorthodox fiscal policies. Later in the day, however, markets have adopted a cautious stance as Trump announced that he would impose a 25% tax on all products entering the US from Canada and Mexico in addition to a 10% tariff on goods from China as one of his first executive orders.
During the American trading hours, the Federal Reserve will publish the minutes of the November policy meeting, at which it decided to lower the policy rate by 25 basis points (bps).
Investors will scrutinize the publication to try to figure out whether the US central bank is likely to lower the policy rate again in December. The CME FedWatch Tool currently shows that markets are pricing in a nearly 44% probability of the Fed leaving the policy rate unchanged at the December policy meeting, suggesting that the USD is facing a two-way risk.
In case the publication shows that policymakers are willing to cut the policy rate again by 25 bps before the end of the year, the USD could come under renewed selling pressure, opening the door for a rebound in GBP/USD. Conversely, the pair could stretch lower if the FOMC Minutes suggest that further policy easing in December is not a done deal, with officials preferring to see more data to confirm either a further weakening in labor market conditions or a lack of progress in disinflation.
GBP/USD Technical Analysis
GBP/USD trades within the descending regression channel and the Relative Strength Index moves sideways near 40 early Tuesday, highlighting a lack of buyer interest.
The mid-point of the descending channel aligns as critical support at 1.2500. If GBP/USD falls below this level and starts using it as resistance, 1.2400 (lower limit of the descending channel) could be seen as the next bearish target.
On the upside, strong resistance seems to have formed at 1.2600, where the upper limit of the descending channel is located. In case GBP/USD clears that level, it could face the next hurdle at 1.2630 (50-period Simple Moving Average) ahead of 1.2700 (static level, round 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, also known as ‘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 above 1.0400 in quiet trading
EUR/USD trades in positive territory above 1.0400 in the American session on Friday. The absence of fundamental drivers and thin trading conditions on the holiday-shortened week make it difficult for the pair to gather directional momentum.
GBP/USD recovers above 1.2550 following earlier decline
GBP/USD regains its traction and trades above 1.2550 after declining toward 1.2500 earlier in the day. Nevertheless, the cautious market mood limits the pair's upside as trading volumes remain low following the Christmas break.
Gold declines below $2,620, erases weekly gains
Gold edges lower in the second half of the day and trades below $2,620, looking to end the week marginally lower. Although the cautious market mood helps XAU/USD hold its ground, growing expectations for a less-dovish Fed policy outlook caps the pair's upside.
Bitcoin misses Santa rally even as on-chain metrics show signs of price recovery
Bitcoin (BTC) price hovers around $97,000 on Friday, erasing most of the gains from earlier this week, as the largest cryptocurrency missed the so-called Santa Claus rally, the increase in prices prior to and immediately following Christmas Day.
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.