GBP/USD Forecast: Pound Sterling buyers hesitate as key resistance holds
- GBP/USD moves sideways in a narrow channel above 1.3500.
- The US Dollar holds its ground despite downward revision to employment data.
- The pair faces a stiff resistance area at 1.3590-1.3600.
GBP/USD fluctuates above 1.3500 in the European session on Wednesday after posting small losses on Tuesday. The pair could attract technical buyers if it manages to clear the 1.3590-1.3600 resistance area.
Pound Sterling 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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | -0.22% | -0.55% | 0.11% | -0.79% | -0.83% | -0.17% | |
| EUR | -0.05% | -0.29% | -0.50% | 0.05% | -0.83% | -0.83% | -0.22% | |
| GBP | 0.22% | 0.29% | -0.32% | 0.34% | -0.53% | -0.55% | 0.07% | |
| JPY | 0.55% | 0.50% | 0.32% | 0.58% | -0.28% | -0.44% | 0.39% | |
| CAD | -0.11% | -0.05% | -0.34% | -0.58% | -0.80% | -0.89% | -0.28% | |
| AUD | 0.79% | 0.83% | 0.53% | 0.28% | 0.80% | -0.00% | 0.62% | |
| NZD | 0.83% | 0.83% | 0.55% | 0.44% | 0.89% | 0.00% | 0.62% | |
| CHF | 0.17% | 0.22% | -0.07% | -0.39% | 0.28% | -0.62% | -0.62% |
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) staged a rebound in the second half of the day and caused GBP/USD to turn south, as markets turned risk-averse on escalating geopolitical tensions in the Middle East.
Meanwhile, the US Bureau of Labor Statistics announced that the preliminary benchmark revision showed that the total nonfarm employment in March 2025 was 911,000 less than initially reported. This announcement failed to convince markets of a large Federal Reserve (Fed) rate cut in September and triggered a 'buy the rumor, sell the fact' action in markets, helping the USD gather strength.
According to the CME FedWatch Tool, markets are currently pricing in about an 8% probability of a 50 bps rate cut at next week's policy meeting, compared to nearly 11% on Tuesday.
Later in the day, producer inflation data from the US will be watched closely by market participants. On a yearly basis, the Producer Price Index (PPI) is expected to rise by 3.3% in August, matching July's increase. For the month, the PPI is seen increasing by 0.3% following the 0.9% rise recorded in July.
The market reaction to the PPI data could be straightforward and short-lived ahead of Thursday's key Consumer Price Index (CPI) data. A stronger-than-forecast increase in the monthly PPI could support the USD with the immediate reaction, while a soft print could weigh on the currency and help the risk mood improve, supporting GBP/USD in the American session.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 50 and GBP/USD continues to trade above the 20-day, 50-day and 100-day Simple Moving Averages (SMAs), suggesting that the bullish bias remains intact but lacks momentum.
On the upside, 1.3590-1.3600 (static level, round level) aligns as a key resistance area before 1.3640 (Fibonacci 78.6% retracement of the latest downtrend) and 1.3700 (static level, round level).
Looking south, support levels could be seen at 1.3500 (static level, 20-day SMA), 1.3465-1.3460 (50-day SMA, 100-day SMA, Fibonacci 50% retracement) and 1.3440 (200-day 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.
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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.
