GBP/USD Forecast: Pound Sterling could struggle to rebound
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UPGRADE- GBP/USD retreats to 1.2450 area following the previous week's rally.
- The risk-averse market environment could make it difficult for GBP/USD to regain its traction.
- The near-term technical outlook suggests that the bullish bias remains intact.
GBP/USD fails to build on the previous week's strong gains and retreats to the 1.2450 area in the European morning on Monday. Although the technical outlook suggests that the bullish bias remains intact, the pair could have a hard time regaining its traction in the risk-averse market environment.
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 strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -2.00% | -2.32% | -0.70% | -0.60% | -1.58% | -1.71% | -1.12% | |
| EUR | 2.00% | -0.39% | 1.20% | 1.32% | 0.49% | 0.19% | 0.77% | |
| GBP | 2.32% | 0.39% | 1.53% | 1.70% | 0.89% | 0.58% | 1.16% | |
| JPY | 0.70% | -1.20% | -1.53% | 0.15% | -0.80% | -1.07% | -0.56% | |
| CAD | 0.60% | -1.32% | -1.70% | -0.15% | -0.92% | -1.11% | -0.54% | |
| AUD | 1.58% | -0.49% | -0.89% | 0.80% | 0.92% | -0.39% | 0.21% | |
| NZD | 1.71% | -0.19% | -0.58% | 1.07% | 1.11% | 0.39% | 0.39% | |
| CHF | 1.12% | -0.77% | -1.16% | 0.56% | 0.54% | -0.21% | -0.39% |
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).
Safe-haven flows dominate the action in financial markets to start the week, helping the US Dollar (USD) hold its ground.
The uncertainty surrounding US President Donald Trump's trade policy after the Wall Street Journal reported that the Trump administration was not planning to negotiate with Canada or Mexico and start imposing 25% tariffs on February 1 causes investors to adopt a cautious stance.
Additionally, the heavy selling pressure on technology stocks in premarket trading reflect the souring mood. At the time of press, Nasdaq Futures were down more than 3% on the day and S&P Futures were losing 1.8%. Reports of China's DeepSeek AI model outperforming Meta’s Llama 3.1, OpenAI’s GPT-4o and Anthropic’s Claude Sonnet 3.5 seem to have triggered a selloff in tech stocks.
The US economic calendar will not feature any high-impact data releases on Monday. Later in the week, the Federal Reserve (Fed) will announce monetary policy decisions. Hence, the risk perception could drive GBP/USD's action in the second half of the day.
GBP/USD Technical Analysis
The Relative Strength Index holds above 60 despite the latest pullback, suggesting that the bullish bias remains intact.
As of writing, GBP/USD was trading at around 1.2450, where the Fibonacci 50% retracement level of the latest downtrend and the 200-period Simple Moving Average (SMA) align. If the pair fails to stabilize above this level and starts using it as resistance, technical buyers could be discouraged. In this scenario, 1.2400 (static level, round level) could be seen as next support before 1.2370 (50-period SMA) and 1.2320 (100-period SMA).
Once GBP/USD confirms 1.2450 as support, 1.2500 (round level, static level) could be seen as next resistance before 1.2530 (Fibonacci 61.8% retracement).
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.
- GBP/USD retreats to 1.2450 area following the previous week's rally.
- The risk-averse market environment could make it difficult for GBP/USD to regain its traction.
- The near-term technical outlook suggests that the bullish bias remains intact.
GBP/USD fails to build on the previous week's strong gains and retreats to the 1.2450 area in the European morning on Monday. Although the technical outlook suggests that the bullish bias remains intact, the pair could have a hard time regaining its traction in the risk-averse market environment.
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 strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -2.00% | -2.32% | -0.70% | -0.60% | -1.58% | -1.71% | -1.12% | |
| EUR | 2.00% | -0.39% | 1.20% | 1.32% | 0.49% | 0.19% | 0.77% | |
| GBP | 2.32% | 0.39% | 1.53% | 1.70% | 0.89% | 0.58% | 1.16% | |
| JPY | 0.70% | -1.20% | -1.53% | 0.15% | -0.80% | -1.07% | -0.56% | |
| CAD | 0.60% | -1.32% | -1.70% | -0.15% | -0.92% | -1.11% | -0.54% | |
| AUD | 1.58% | -0.49% | -0.89% | 0.80% | 0.92% | -0.39% | 0.21% | |
| NZD | 1.71% | -0.19% | -0.58% | 1.07% | 1.11% | 0.39% | 0.39% | |
| CHF | 1.12% | -0.77% | -1.16% | 0.56% | 0.54% | -0.21% | -0.39% |
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).
Safe-haven flows dominate the action in financial markets to start the week, helping the US Dollar (USD) hold its ground.
The uncertainty surrounding US President Donald Trump's trade policy after the Wall Street Journal reported that the Trump administration was not planning to negotiate with Canada or Mexico and start imposing 25% tariffs on February 1 causes investors to adopt a cautious stance.
Additionally, the heavy selling pressure on technology stocks in premarket trading reflect the souring mood. At the time of press, Nasdaq Futures were down more than 3% on the day and S&P Futures were losing 1.8%. Reports of China's DeepSeek AI model outperforming Meta’s Llama 3.1, OpenAI’s GPT-4o and Anthropic’s Claude Sonnet 3.5 seem to have triggered a selloff in tech stocks.
The US economic calendar will not feature any high-impact data releases on Monday. Later in the week, the Federal Reserve (Fed) will announce monetary policy decisions. Hence, the risk perception could drive GBP/USD's action in the second half of the day.
GBP/USD Technical Analysis
The Relative Strength Index holds above 60 despite the latest pullback, suggesting that the bullish bias remains intact.
As of writing, GBP/USD was trading at around 1.2450, where the Fibonacci 50% retracement level of the latest downtrend and the 200-period Simple Moving Average (SMA) align. If the pair fails to stabilize above this level and starts using it as resistance, technical buyers could be discouraged. In this scenario, 1.2400 (static level, round level) could be seen as next support before 1.2370 (50-period SMA) and 1.2320 (100-period SMA).
Once GBP/USD confirms 1.2450 as support, 1.2500 (round level, static level) could be seen as next resistance before 1.2530 (Fibonacci 61.8% retracement).
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.
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