- GBP/USD holds above 1.3350 in the European session on Tuesday.
- The near-term technical outlook suggests that the bullish bias remains intact.
- Several Fed policymakers will be delivering speeches later in the day.
GBP/USD clings to small daily gains above 1.3350 early Tuesday after posting strong gains on Monday. The pair’s technical outlook suggests that buyers could look to retain control in the near term.
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 strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.60% | -0.64% | -0.51% | -0.27% | -0.19% | -0.55% | -0.44% | |
| EUR | 0.60% | -0.06% | 0.13% | 0.40% | 0.55% | 0.11% | 0.17% | |
| GBP | 0.64% | 0.06% | -0.10% | 0.46% | 0.60% | 0.17% | 0.23% | |
| JPY | 0.51% | -0.13% | 0.10% | 0.25% | 0.49% | 0.16% | 0.13% | |
| CAD | 0.27% | -0.40% | -0.46% | -0.25% | 0.09% | -0.29% | -0.23% | |
| AUD | 0.19% | -0.55% | -0.60% | -0.49% | -0.09% | -0.43% | -0.36% | |
| NZD | 0.55% | -0.11% | -0.17% | -0.16% | 0.29% | 0.43% | 0.06% | |
| CHF | 0.44% | -0.17% | -0.23% | -0.13% | 0.23% | 0.36% | -0.06% |
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 (USD) came under bearish pressure to start the week and fuelled GBP/USD’s rally on Monday, as markets reacted to Moody’s decision to downgrade the United States’ sovereign credit rating, citing an unsustainable deficit.
Early Tuesday, the cautious market stance caps GBP/USD’s upside. Additionally, the USD holds its ground, supported by the latest comments from Federal Reserve (Fed) officials. Atlanta Fed President Raphael Bostic repeated that he sees the Fed cutting the policy rate once this year. Additionally, Minneapolis Fed President Neel Kashkari and Fed Vice Chairman Philip Jefferson noted that they need to wait for more information before taking another policy step.
Meanwhile, Bank of England (BoE) Chief Economist Huw Pill argued early Tuesday that the quarterly pace of rate reductions would be “too rapid,” adding that he is concerned about indicators pointing to inflation pressure. These comments seem to be helping Pound Sterling stay resilient against its peers.
The economic calendar will not offer any high-tier macroeconomic data releases on Tuesday that could drive the USD’s valuation. Hence, investors will continue to scrutinize comments from central bank officials.
The CME Group FedWatch Tool shows that markets are pricing in a more than 70% probability that the Fed will cut the policy rate at least twice in 2025. In case Fed officials push back against this market expectation, the USD could gather strength and cause GBP/USD to lose its traction.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart edges lower to below-60 but GBP/USD holds comfortably above the 20-period, 50-period, 100-period and the 200-period Simple Moving Averages (SMA), suggesting that the bullish stance remains intact, while losing some momentum.
On the upside, 1.3390-1.3400 (static level, round level) aligns as immediate resistance for GBP/USD before 1.3440 (upper limit of the latest uptrend) and 1.3500 (static level, round level). Looking south, supports could be spotted at 1.3300 (100-period SMA), 1.3270 (50-period SMA, Fibonacci 23.6% retracement of the latest uptrend) and 1.3225 (200-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, 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.
