GBP/USD Forecast: Pound Sterling holds bullish bias ahead of long weekend
- GBP/USD fluctuates in a narrow range at around 1.3250 in the European session on Thursday.
- The near-term technical outlook suggests that the bullish bias remains intact.
- The US economic calendar will feature mid-tier data releases.
After reaching a fresh 2025-high near 1.3300 on Wednesday, GBP/USD lost its bullish momentum and ended the day virtually unchanged. The pair extends its sideways grind at around 1.3250 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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -1.19% | -0.84% | 0.08% | -1.06% | -1.69% | -0.14% | |
| EUR | 0.11% | -0.59% | -0.28% | 0.65% | -0.21% | -1.15% | 0.41% | |
| GBP | 1.19% | 0.59% | 0.72% | 1.23% | 0.39% | -0.56% | 1.01% | |
| JPY | 0.84% | 0.28% | -0.72% | 0.91% | -0.46% | -1.07% | 0.88% | |
| CAD | -0.08% | -0.65% | -1.23% | -0.91% | -1.10% | -1.78% | -0.30% | |
| AUD | 1.06% | 0.21% | -0.39% | 0.46% | 1.10% | -0.94% | 0.61% | |
| NZD | 1.69% | 1.15% | 0.56% | 1.07% | 1.78% | 0.94% | 1.60% | |
| CHF | 0.14% | -0.41% | -1.01% | -0.88% | 0.30% | -0.61% | -1.60% |
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 improving risk sentiment helps GBP/USD hold its ground on Thursday but the modest recovery seen in the US Dollar (USD) limits the pair's upside.
During the early trading hours of the Asian session on Thursday, China’s Foreign Ministry said in a statement that they will pay no attention if the US were to continue to play the "tariff numbers game." Reflecting the upbeat market mood, US stock index futures were last seen rising between 0.9% and 1.2%.
In the second half of the day, the US economic calendar will feature Housing Starts and Building Permits data for March. Additionally, the US Department of Labor will release the weekly Initial Jobless Claims data.
In case there is a noticeable decline in the number of first-time applications for unemployment benefits, with a reading below 210K, the immediate reaction could help the USD gather strength and cause GBP/USD to stretch lower.
Meanwhile, markets will pay close attention to the European Central Bank's (ECB) policy announcements. If the ECB adopts a hawkish tone, the Euro could trigger capital outflows out of Pound Sterling and make it difficult for GBP/USD traction, even if the USD loses strength in the second half of the day.
GBP/USD Technical Analysis
GBP/USD broke below the lower limit of the ascending regression channel but managed to stabilize above the 20-period Simple Moving Average (SMA). Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60, reflecting sellers' hesitancy.
On the upside, interim resistance is located at 1.3250 (static level) before 1.3300 (round level, static level) and 1.3360 (static level). Looking south, first support could be seen at 1.3230 (20-period SMA) ahead of 1.3200 (static level) and 1.3160 (static level).
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.
