- GBP/USD struggles to hold above 1.2900 in the European session on Thursday.
- The US economic docket will feature weekly Initial Jobless Claims and Q2 GDP data.
- The negative shift seen in risk mood could continue to limit the pair's upside.
GBP/USD failed to make a decisive move in either direction and closed virtually unchanged on Wednesday. As safe-haven flows dominate the financial markets on Thursday, the pair struggles to gain traction and trades slightly below 1.2900.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.35% | 0.22% | -3.12% | 0.80% | 2.31% | 1.75% | -0.76% | |
| EUR | -0.35% | -0.14% | -3.50% | 0.41% | 2.00% | 1.34% | -1.16% | |
| GBP | -0.22% | 0.14% | -3.48% | 0.54% | 2.14% | 1.47% | -1.04% | |
| JPY | 3.12% | 3.50% | 3.48% | 4.07% | 5.67% | 4.98% | 2.37% | |
| CAD | -0.80% | -0.41% | -0.54% | -4.07% | 1.59% | 0.94% | -1.56% | |
| AUD | -2.31% | -2.00% | -2.14% | -5.67% | -1.59% | -0.64% | -3.12% | |
| NZD | -1.75% | -1.34% | -1.47% | -4.98% | -0.94% | 0.64% | -2.44% | |
| CHF | 0.76% | 1.16% | 1.04% | -2.37% | 1.56% | 3.12% | 2.44% |
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).
Investors grow increasingly concerned over a gloomy economic outlook as the People’s Bank of China (PBoC) unexpectedly loosened its policy for the second time this week. Following the decision to lower the one-year and five-year Loan Prime Rates by 10 basis points earlier in the week, the PBoC announced on Thursday that it cut the one-year Medium-term Lending Facility (MLF) rate from 2.50% to 2.30%.
Reflecting the risk-averse market atmosphere, the UK's FTSE 100 Index is down nearly 1% in the European session. Meanwhile, Nasdaq futures and S&P 500 futures were last seen losing 0.4% and 0.2%, respectively.
In the second half of the day, the US Bureau of Economic Analysis will release its first estimate of the Gross Domestic Product (GDP) growth for the second quarter. Markets expect the US' GDP to expand at an annual rate of 2% following the 1.4% growth recorded in the previous quarter. In case the GDP reading arrives below analysts' estimates, the USD could have a hard time finding demand in the early American session. Nevertheless, GBP/USD's upside is likely to remain capped if Wall Street's main indexes open in the red and stretch lower.
The US economic docket will also feature the weekly Initial Jobless Claims, which is forecast to decline to 238,000 from 243,000 last week.
GBP/USD Technical Analysis
GBP/USD holds slightly above 1.2880, where the Fibonacci 38.2% retracement level of the latest uptrend and the 100-period Simple Moving Average (SMA) are located. In case this support level fails, 1.2830 (Fibonacci 50% retracement) and 1.2800-1.2790 (psychological level, 200-period SMA) could be seen as next bearish targets.
On the upside, 1.2900 (20-period SMA, psychological level, static level) aligns as immediate resistance ahead of 1.2940-1.2950 (Fibonacci 23.6% retracement, 50-period SMA).
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 below 1.0850 after upbeat US data
Following a short-lasting recovery attempt, EUR/USD struggles to keep its footing and trades below 1.0850 in the second half of the day. The upbeat GDP data from the US helps the US Dollar stay resilient against its rivals and doesn't allow the pair to gain traction.
GBP/USD remains on defensive below 1.2900 as USD rebounds
GBP/USD maintains the bearish bias and trades in the red below 1.2900 in the American session on Thursday. The US Dollar benefits from the risk-averse market atmosphere and stronger-than-expected US GDP data, causing the pair to stretch lower.
Gold slumps toward $2,360 following strong US GDP reading
Gold extends its daily slide and trades at its lowest level in two weeks near $2,360. Growing concerns over the Chinese economic outlook and the US Dollar's resilience on upbeat growth data force XAU/USD to remain under bearish pressure on Thursday.
Bitcoin price declines as Kraken exchange executes first reimbursements to Mt. Gox creditors
Bitcoin Magazine CEO David Bailey confirms that Kamala Harris will not speak at the upcoming Bitcoin Conference. Bitcoin adoption has grown as Ferrari Luxury Car Manufacturer accepts crypto payments across Europe.
Economic growth exceeded expectation in Q2
The economy expanded at a 2.8% annualized rate in the second quarter. While that handily exceeded expectations, we suspect that it may be the fastest GDP growth rate we are apt to see for the foreseeable future.