GBP/USD Forecast: Pound Sterling buyers could take action on weak US data
- GBP/USD fluctuates below 1.3400 after posting small losses on Tuesday.
- The US economic calendar will feature key data releases that could influence the USD's valuation.
- The technical picture highlights a loss of bullish momentum in the near term.
After posting strong gains on Monday, GBP/USD struggled to hold its ground and closed marginally lower on Tuesday. The pair stays relatively quiet and moves sideways below 1.3400 as investors refrain from taking large positions ahead of key macroeconomic data releases from the United States (US).
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.56% | -0.60% | -0.28% | 0.03% | 0.53% | -0.55% | |
| EUR | 0.14% | -0.47% | -0.45% | -0.15% | 0.09% | 0.68% | -0.42% | |
| GBP | 0.56% | 0.47% | 0.00% | 0.34% | 0.55% | 1.15% | 0.07% | |
| JPY | 0.60% | 0.45% | 0.00% | 0.35% | 0.67% | -0.28% | 0.36% | |
| CAD | 0.28% | 0.15% | -0.34% | -0.35% | 0.19% | 0.81% | -0.26% | |
| AUD | -0.03% | -0.09% | -0.55% | -0.67% | -0.19% | 0.59% | -0.48% | |
| NZD | -0.53% | -0.68% | -1.15% | 0.28% | -0.81% | -0.59% | -1.07% | |
| CHF | 0.55% | 0.42% | -0.07% | -0.36% | 0.26% | 0.48% | 1.07% |
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).
On Tuesday, the data from the US showed that JOLTS Job Openings declined to 7.19 million in March. This reading came in below the market expectation of 7.5 million and made it difficult for the US Dollar (USD) to gather strength. Nevertheless, easing fears over a further escalation of the US-China trade conflict helped the currency stay resilient against its rivals and didn't allow GBP/USD to gain traction.
Citing two sources familiar with the matter, Reuters reported on Tuesday that China has decided to waive the 125% tariff on ethane imports from the US imposed earlier this month. Meanwhile, US Treasury Secretary Scott Bessent said that US President Donald Trump was creating "strategic uncertainty" in trade negotiations, adding that he expects the aperture of uncertainty to narrow.
In the second half of the day, the US Bureau of Economic Analysis (BEA) will release the first estimate of the annualized Gross Domestic Product (GDP) growth for the first quarter. Markets expect the US' GDP to post an expansion of 0.4% following the 2.4% growth reported in the last quarter of 2024.
A stronger-than-forecast GDP print could ease worries about an economic downturn in the US and help the USD outperform its rivals with the immediate reaction. On the flip side, a significant negative surprise could feed into expectations for a Federal Reserve (Fed) rate cut in June and trigger a USD selloff. According to the CME FedWatch Tool, markets are pricing in a nearly 35% probability of the Fed holding the policy rate unchanged in June, after maintaining the status quo in May.
GBP/USD Technical Analysis
GBP/USD holds above the 20-period and the 50-period Simple Moving Averages (SMA) on the 4-hour chart, while the Relative Strength Index (RSI) indicator stays below 60, suggesting that the bullish bias remains intact but lacks momentum.
On the downside, 1.3340 (50-period SMA) aligns as the first support level before 1.3300-1.3290 (round level, lower limit of the ascending channel) and 1.3200 (100-period SMA). Looking north, resistances could be spotted at 1.3440 (static level) and 1.3500 (mid-point of the ascending channel).
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
