- GBP/USD moves sideways below 1.3150 in the European session on Monday.
- The pair could stretch lower in case 1.3130 turns into resistance.
- Markets are likely to remain quiet as trading conditions remain thin.
GBP/USD turned south on renewed US Dollar (USD) strength and lost 0.7% last week. The pair fluctuates in a very narrow band during the European session morning but the technical outlook suggests that the bearish bias stays intact.
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 Canadian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 1.13% | 0.63% | 1.72% | -0.14% | 0.20% | -0.11% | 0.25% | |
EUR | -1.13% | -0.55% | 0.58% | -1.24% | -1.00% | -1.21% | -0.85% | |
GBP | -0.63% | 0.55% | 1.02% | -0.76% | -0.46% | -0.73% | -0.36% | |
JPY | -1.72% | -0.58% | -1.02% | -1.80% | -1.40% | -1.56% | -1.34% | |
CAD | 0.14% | 1.24% | 0.76% | 1.80% | 0.34% | 0.08% | 0.39% | |
AUD | -0.20% | 1.00% | 0.46% | 1.40% | -0.34% | -0.21% | 0.15% | |
NZD | 0.11% | 1.21% | 0.73% | 1.56% | -0.08% | 0.21% | 0.35% | |
CHF | -0.25% | 0.85% | 0.36% | 1.34% | -0.39% | -0.15% | -0.35% |
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).
Upbeat macroeconomic data releases from the US provided a boost to the USD in the second half of the previous week. On Friday, the data published by the Bureau of Economic Analysis showed that the core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, rose 0.2% on a monthly basis, as forecast. This reading allowed the USD to extend its rebound into the weekend.
The economic calendar will not offer any high-impact data releases that could drive GBP/USD's action on Monday. Furthermore, financial markets in the US will remain closed in observance of the Labor Day holiday, paving the way for an extended sideways action in the pair.
The ISM will release Manufacturing and Services PMI data for August later this week. More importantly, the US Bureau of Labor Statistics will publish the August jobs report on Friday, which will include Nonfarm Payrolls, Unemployment Rate and wage inflation figures.
GBP/USD Technical Analysis
GBP/USD continues to trade below the 20-period and the 50-period Simple Moving Averages (SMA) on Monday. Additionally, the Relative Strength Index (RSI) stays near 40, pointing to a lack of recovery momentum.
On the downside, immediate support is located at 1.3130, where the Fibonacci 23.6% retracement of the latest uptrend is located. If GBP/USD falls below this level and starts using it as resistance, 1.3100 (static level) could act as interim support ahead of 1.3050 (Fibonacci 38.2% retracement).
On the other side, 1.3160-1.3170 (50-period SMA, 20-period SMA) form the first resistance area before 1.3200 (static level, psychological level) and 1.3260 (end-point of the uptrend).
(This story was corrected on September 2 at 09:57 GMT to say that 1.3160-1.3170 form the first resistance area, not 1.3710.)
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 holds ground above 1.1050 as USD struggles](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/world-currencies-53475296_XtraSmall.jpg)
EUR/USD holds ground above 1.1050 as USD struggles
EUR/USD is holding gains above 1.1050 in the European trading on Monday. A pause in the US Dollar recovery helps the pair stay afloat even though markets appear cautious ahead of key US employment data releases later this week. US Labor Day-led thin trading will likely extend.
![GBP/USD stays firm near 1.3150 amid light trading](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-1078115946_XtraSmall.jpg)
GBP/USD stays firm near 1.3150 amid light trading
GBP/USD remains bid near 1.3150 in the European session on Monday amid the US Labor Day-led thin liquidity. In the absence of top-tier economic data releases from the UK this week, the US Dollar price dynamic will be the main driver for the GBP/USD.
![Gold trades in tight range as upside looks capped by USD recovery](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/safe-investment-gm147311616-17537479_XtraSmall.jpg)
Gold trades in tight range as upside looks capped by USD recovery
Gold (XAU/USD) continues trading in a familiar range just above $2,500 on Monday even as Asian stocks fall due to China-growth fears following the release of mixed Manufacturing Purchasing Managers Index (PMI) data.
![Tron price is set for a decline as technical indicators show bearish momentum](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Tokens/TRON/tron_XtraSmall.jpg)
Tron price is set for a decline as technical indicators show bearish momentum
Tron (TRX) retested its resistance barrier and declined 6.1% last week. In the Asian session on Monday, it trades at $0.1557. Tron's price action suggests a decline ahead, as the bearish divergence in technical indicators shows.
![Week ahead: US labour data and the BoC rate announcement in focus](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/working-america-gm173864680-9188844_XtraSmall.jpg)
Week ahead: US labour data and the BoC rate announcement in focus
With US Federal Reserve Chair Jerome Powell’s recent speech at the Jackson Hole Symposium confirming that it is time to begin easing policy as well as underlining the importance of the jobs market, this week’s jobs data may help determine how the Fed approaches its easing cycle.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.