British Pound struggles near June 26 lows as USD retains bullish tone ahead of US NFP

GBP/USD struggles to lure buyers as the USD stands firm near its highest level since March 2025.
Oil-driven inflation fears keep US bond yields near multi-year highs, underpinning the Greenback.
Geopolitical risks further benefit the buck, while UK fiscal concerns contribute to the GBP decline.

Haresh Menghani FXStreet

The GBP/USD pair languished near its lowest level since June 26, touched the previous day's low, trading below the 1.3200 mark during the Asian session on Friday amid a bullish US Dollar (USD). Spot prices seem poised to register modest losses for the third straight week as traders now look to the US monthly employment details for a fresh impetus.

The popularly known US Nonfarm Payrolls (NFP) report will be looked upon for more cues about the Federal Reserve's (Fed) future policy path amid receding bets for an October rate hike, which will play a key role in influencing the near-term USD price dynamics. In the meantime, the USD Index (DXY), which tracks the Greenback against a basket of currencies, stands firm near a one-and-a-half-year top as oil-driven inflation fears limit the overnight pullback in US bond yields from multi-year highs.

Apart from this, persistent geopolitical uncertainties stemming from the US-Iran standoff benefit the safe-haven buck. Meanwhile, 30-year gilt yields topped 6% for the first time since early 1998, fueling fiscal worries ahead of the Autumn Budget on October 28. This, in turn, undermines the British Pound (GBP), which is seen as another factor weighing on the GBP/USD pair. The downside, however, seems limited as traders might refrain from placing aggressive directional bets ahead of the key data risk.

GBP/USD daily chart

Technical Analysis

The GBP/USD pair keeps a bearish near-term tone, and the overnight break below the 1.3200 mark has set the stage for a fall towards retesting the year-to-date low, around the 1.3140 region, touched in June. This is followed by the 1.3100 round figure, which, if broken, should pave the way for an extension of the recent downtrend witnessed over the past month or so.

On the top side, any attempted recovery is more likely to confront stiff resistance ahead of the 1.3300 mark, and sustained strength beyond the said barrier is needed to back the case for further upside. The GBP/USD pair might then aim to test the technically significant 200-day Simple Moving Average (SMA) at 1.3448.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling FAQs

What is the Pound Sterling?

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).

How do the decisions of the Bank of England impact on the Pound Sterling?

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.

How does economic data influence the value of the Pound?

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.

How does the Trade Balance impact the Pound?

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.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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