- GBP/USD recovered modestly after falling to multi-week lows.
- 1.2590 aligns as strong resistance for the pair.
- Investors await US JOLTS Job Openings data and comments from Fed officials.
GBP/USD broke below 1.2600 in the American session on Monday and touched its weakest level in seven weeks below 1.2550. The pair stages a rebound in the European trading hours on Tuesday but it could find it difficult to clear the strong 1.2590 resistance.
Renewed US Dollar (USD) strength after the ISM Manufacturing PMI arrived at its highest level since September 2022 at 50.3 on Monday weighed heavily on GBP/USD. Moreover, the Prices Paid Index, the inflation component of the PMI survey, rose to 55.8 in March from 52.5 in February, highlighting a strengthening input inflation and further supporting the USD.
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 US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.50% | 0.54% | 0.26% | 0.36% | 0.18% | 0.46% | 0.75% | |
| EUR | -0.50% | 0.04% | -0.22% | -0.14% | -0.32% | -0.05% | 0.26% | |
| GBP | -0.53% | -0.03% | -0.27% | -0.17% | -0.36% | -0.07% | 0.21% | |
| CAD | -0.27% | 0.23% | 0.25% | 0.08% | -0.09% | 0.19% | 0.48% | |
| AUD | -0.36% | 0.14% | 0.18% | -0.10% | -0.19% | 0.09% | 0.39% | |
| JPY | -0.19% | 0.35% | 0.36% | 0.10% | 0.21% | 0.29% | 0.57% | |
| NZD | -0.47% | 0.04% | 0.08% | -0.19% | -0.10% | -0.29% | 0.28% | |
| CHF | -0.76% | -0.25% | -0.21% | -0.48% | -0.39% | -0.58% | -0.29% |
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).
Early Tuesday, the data from the UK showed that S&P Global/CIPS Manufacturing PMI got revised higher to 50.3 in March from 49.9 in the flash estimate and helped Pound Sterling find a foothold.
Later in the day, JOLTS Job Openings data for February will be featured in the US economic docket. A reading above 9 million could help the USD preserve its strength, while a print at or below 8.5 million could have the opposite effect on the currency's performance.
Investors will also pay close attention to comments from Federal Reserve (Fed) officials. The CME FedWatch Tool shows that markets are pricing in a nearly 60% probability of a 25 basis points Fed rate cut in June, suggesting that the USD faces a two-way risk depending on policymakers' tone. If market participants refrain from pricing in a policy pivot in June, the USD could continue to outperform its rivals.
GBP/USD Technical Analysis
The 200-day Simple Moving Average (SMA) aligns as stiff resistance at 1.2590. In case GBP/USD fails to clear that level, technical sellers could remain interested. On the downside, static support seems to have formed at 1.2540 before 1.2520 (beginning point of the latest uptrend) and 1.2500 (psychological level).
Above 1.2590, the 50-period SMA on the 4-hour chart could act as interim resistance at 1.2620 ahead of 1.2650 (100-day SMA) and 1.2670-1.2680 (Fibonacci 61.8% retracement, 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, 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.
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