- GBP/USD kept an erratic performance in place throughout this week.
- Firm flash PMIs provided some colour to the British pound in past days.
- The BoE is largely expected to keep rates unchanged.
It was a fairly choppy week for the British pound, which prompted GBP/USD to maintain its consolidative fashion between 1.2600 and 1.2800.
Dollar dynamics ruled sentiment in the past week
Despite the ongoing choppiness, GBP/USD remained at the mercy of the developments gyrating around the Greenback, which has also been moving within a range-bound trade when gauged by the USD Index (DXY).
Among the bright spots supporting a constructive bias for the Pound Sterling (GBP) an auspicious reading emerged from advanced PMIs for the current month, which improved from the December’s prints in both the manufacturing and the services sectors.
Adding to the above, there were also positive surprises from the Public Sector finances results and Consumer Confidence tracked by GfK. Somewhat eclipsing that data emerged worsening figures from the Consortium of British Industry (CBI) Industrial Trends Orders and CBI Distributive Trades Survey.
The BoE and the Fed steal the show next week
With the BoJ and the ECB meetings already out of the way, investors’ attention will now shift to the upcoming FOMC and BoE events on January 31 and February 1, respectively.
The broad-based consensus among market participants sees both central banks refraining from any move on rates, in line with the decisions by the BoJ and the ECB to keep their policy rates on hold.
The Bank of England (BoE) is widely anticipated to maintain its 5.25% bank rate, although this time a unanimous vote looks more likely (than the usual 6-3 pattern) on February 1, aligning with both consensus and current market expectations. Investors are also seen closely watching the updated projections and the subsequent press conference.
Despite this anticipated decision, the likelihood of a dovish message from the bank appears less probable, leaning instead towards a more cautious stance particularly in light of the rebound in UK inflation witnessed during December.
GBP/USD daily chart
GBP/USD: Technical Outlook
The GBP/USD appears contained by the neighbourhood of 1.2600 for the time being. If sellers retake control, there is direct competition at the so-far 2024 low of 1.2596, set on January 17. If Cable falls below this level, a challenge of the 200-day Simple Moving Average (SMA) at 1.2554 may develop ahead of the December 2023 bottom of 1.2500 (noted on December 13). Further south comes the intermediate 100-day SMAs at 1.2455 prior to the November low of 1.2187, the October low of 1.2037 (October 3), the critical 1.2000 level, and, ultimately, the 2023 bottom of 1.1802, which was achieved on November 10.
If the bullish trend accelerates, the pair may revisit the December top of 1.2827. (observed on December 28). The breakout of the latter could pave the way for a move to the weekly peak of 1.2995 of July 27, 2023, the critical threshold of 1.3000 only a little higher.
The daily Relative Strength Index (RSI) improves to 56, and the MACD remains in the positive zone
Pound Sterling price this week
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies this week. Pound Sterling was the weakest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.28% | -0.25% | 0.15% | 0.07% | -0.06% | 0.23% | -0.60% | |
| EUR | -0.32% | -0.57% | -0.17% | -0.25% | -0.38% | -0.09% | -0.88% | |
| GBP | 0.24% | 0.53% | 0.39% | 0.32% | 0.19% | 0.48% | -0.35% | |
| CAD | -0.13% | 0.18% | -0.37% | -0.04% | -0.15% | 0.13% | -0.73% | |
| AUD | -0.08% | 0.18% | -0.33% | 0.07% | -0.14% | 0.16% | -0.66% | |
| JPY | 0.06% | 0.35% | -0.19% | 0.13% | 0.13% | 0.30% | -0.58% | |
| NZD | -0.29% | 0.01% | -0.55% | -0.13% | -0.23% | -0.29% | -0.90% | |
| CHF | 0.59% | 0.88% | 0.35% | 0.72% | 0.67% | 0.57% | 0.83% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
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 steady at around 1.0850 ahead of Powell's testimony
EUR/USD started the week with a bearish gap as markets reacted to France election outcome. The pair, however, managed to find its footing and stabilized near 1.0850, with investors refraining from taking large positions ahead of Fed Chairman Powell's testimony on Tuesday.
GBP/USD climbs to multi-week highs near 1.2850
GBP/USD regained its traction and advanced to its highest level since mid-June above 1.2800. The US Dollar struggles to find demand as market focus shifts to Fed Chairman Powell's congressional testimony, allowing the pair to stretch higher.
Gold trims recent gains, holds above $2,350
After posting impressive gains on Friday, Gold stays under bearish pressure and falls toward $2,370 on Monday. Reports of China's Central Bank pausing Gold purchases for the second straight month in June weighs on XAU/USD.
Crypto Today: Bitcoin recovers even as German government BTC transfers continue, Ethereum and XRP looking up
Bitcoin trades above $57,000 on Monday even as investors remain fearful amid mounting pressure of German BTC transfers. Ethereum trades above the psychologically important $3,000 level as ETH traders anticipate Spot ETF approval by the SEC.
Five fundamentals for the week: Powell's powerful testimony, politics and inflation figures stand out Premium
How fast is the US economy slowing? That remains the question for investors, eager to see rate cuts – but fearful of recession. After Nonfarm Payrolls figures showed weakness on Friday, a response from the US central bank and inflation data is of interest.