GBP/USD Forecast: Pound Sterling holds above key technical level
- GBP/USD holds above 1.2650 in the European session on Thursday.
- The near-term technical outlook remains bullish, while 1.2650 holds as support.
- US President Trump will meet with British Prime Minister Keir Starmer later in the day.
GBP/USD climbed above 1.2700 for the first time in over two months on Wednesday but erased a large portion of its daily gains to close marginally higher. The pair stays in a consolidation phase and trades above 1.2650 in the European session on Thursday.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.18% | -0.34% | 0.43% | 0.70% | 0.88% | 1.00% | -0.12% | |
| EUR | 0.18% | -0.25% | 0.44% | 0.70% | 1.04% | 1.00% | -0.11% | |
| GBP | 0.34% | 0.25% | 0.76% | 0.95% | 1.30% | 1.25% | 0.14% | |
| JPY | -0.43% | -0.44% | -0.76% | 0.25% | 0.51% | 0.64% | -0.47% | |
| CAD | -0.70% | -0.70% | -0.95% | -0.25% | 0.13% | 0.30% | -0.80% | |
| AUD | -0.88% | -1.04% | -1.30% | -0.51% | -0.13% | -0.04% | -1.15% | |
| NZD | -1.00% | -1.00% | -1.25% | -0.64% | -0.30% | 0.04% | -1.09% | |
| CHF | 0.12% | 0.11% | -0.14% | 0.47% | 0.80% | 1.15% | 1.09% |
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) benefited from the risk-averse market atmosphere in the American session on Wednesday and caused GBP/USD to edge lower. The uncertainty surrounding US President Donald Trump's trade policy forced investors to adopt a cautious stance midweek. Trump said that they are planning to impose tariffs on European imports. Although he noted that they will share details on EU tariffs soon, he explained that they are planning to impose 25% tariffs on autos and some other goods.
Trump is scheduled to meet British Prime Minister Keir Starmer later in the day and hold a joint press conference afterward. Trump and Starmer are expected to discuss the US' involvement in providing security guarantees for Ukraine once there is a peace agreement with Russia.
Weekly Initial Jobless Claims and January Durable Goods Orders will be featured in the US economic calendar on Thursday. Markets expect the number of first-time applications for unemployment benefits to edge higher to 221,000 in the week ending February 22, from 219,000 in the previous week. A bigger-than-expected increase in this data could hurt the USD with the initial reaction. Additionally, the US Bureau of Economic Analysis will release the second estimate of the fourth-quarter Gross Domestic Product (GDP) growth.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 50 and GBP/USD holds comfortably above 1.2650, where the 100-day Simple Moving Average (SMA) is located. As long as 1.2650 stays intact as support, technical buyers are likely to retain control of the pair's action.
On the upside, 1.2700-1.2710 (round level, static level) aligns as first resistance before 1.2750 (static level) and 1.2800 (static level, beginning point of the latest downtrend).
Looking south, supports could be seen at 1.2650 (100-day SMA), 1.2600 (static level, round level), and 1.2550-1.2540 (100-period SMA on the 4-hour chart, Fibonacci 61.8% retracement of the latest downtrend).
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.
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.
