• GBP/USD trades below 1.2700 in the European morning on Wednesday.
  • Annual CPI inflation in the UK rose to 2.6% in November as expected. 
  • The Fed will announce the interest rate decision and publish the revised dot plot.

After closing the second consecutive day in positive territory on Tuesday, GBP/USD edges lower early Wednesday and trades below 1.2700. Investors eagerly await the Federal Reserve's (Fed) monetary policy announcements.

British Pound PRICE Last 7 days

The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the weakest against the US Dollar.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.29% 0.67% 1.18% 1.06% 1.03% 1.16% 1.22%
EUR -0.29%   0.38% 0.90% 0.76% 0.74% 0.87% 0.93%
GBP -0.67% -0.38%   0.49% 0.38% 0.35% 0.48% 0.54%
JPY -1.18% -0.90% -0.49%   -0.12% -0.14% -0.02% 0.05%
CAD -1.06% -0.76% -0.38% 0.12%   -0.02% 0.10% 0.16%
AUD -1.03% -0.74% -0.35% 0.14% 0.02%   0.13% 0.19%
NZD -1.16% -0.87% -0.48% 0.02% -0.10% -0.13%   0.07%
CHF -1.22% -0.93% -0.54% -0.05% -0.16% -0.19% -0.07%  

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).

The UK's Office for National Statistics reported in the European morning that annual inflation in the UK, as measured by the change in the Consumer Price Index (CPI), rose to 2.6% in November from 2.3% in October, as anticipated. The core CPI rose 3.5% on a yearly basis, up from the 3.3% increase recorded in October but below analysts' estimate of 3.6%. These figures failed to trigger a noticeable market reaction.

The Fed is set to cut the policy rate by 25 basis points (bps) to the range of 4.25%-4.5% following the last meeting of the year. As such a decision is already fully priced in, it is unlikely to influence the US Dollar's (USD) valuation in a significant way. Instead, investors will pay close attention to the revised Summary of Economic Projections (SEP), the so-called dot plot.

In case the dot plot suggests that policymakers project at least a rate reduction of 100 bps in 2025, the USD is likely to struggle to find demand. On the flip side, GBP/USD could turn south if the SEP shows that policymakers foresee less than 100 bps of rate cuts next year.

Starting at 19:30 GMT, Fed Chairman Jerome Powell will deliver the policy statement and respond to questions in a press conference. If Powell notes there is growing uncertainty surrounding the inflation outlook on potential tariffs, investors could see this as a sign that the Fed will adopt a more gradual approach to policy easing, boosting the USD.

GBP/USD Technical Analysis

GBP/USD faces immediate resistance at 1.2700 (100-period Simple Moving Average (SMA), Fibonacci 38.2% retracement of the latest downtrend) ahead of 1.2730 (200-period SMA) and 1.2750 (Fibonacci 50% retracement).

Looking south, first support could be spotted at 1.2670 (20-period SMA) before 1.2620 (Fibonacci 23.6% retracement).

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.

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD trims gains toward 1.1000 as focus shifts to Fed Minutes

EUR/USD trims gains toward 1.1000 as focus shifts to Fed Minutes Premium

EUR/USD heads toward 1.1000 in the European session on Wednesday, reversing the uptick to near 1.1100 , The US Dollar recover as traders resort to repositioning ahead of the Fed Minutes release. However, USD buyers stay cautious as the trade war escalation aggravates US economic concerns. 

EUR/USD News
GBP/USD revisits 1.2800 as US Dollar finds footing

GBP/USD revisits 1.2800 as US Dollar finds footing

GBP/USD is trimming gains to retest 1.2800 in European trading on Wednesday. The pair faces headwinds as the US Dollar stages a modest comeback even as investors remain wary over the impact of the escalating global trade war on the US economic prospects. Tariff updates and Fed Minutes awaited. 

GBP/USD News
Gold price builds on strong intraday gains; bulls retain control near $3,050 area amid risk-off mood

Gold price builds on strong intraday gains; bulls retain control near $3,050 area amid risk-off mood

Gold price climbs back closer to the $3,050 area during the early European session on Thursday as worries that an all-out global trade war would push the world economy into recession continue to boost safe-haven demand.

Gold News
XRP Price Forecast: XXRP ETF and Trump tariffs shaping XRP fundamental outlook

XRP Price Forecast: XXRP ETF and Trump tariffs shaping XRP fundamental outlook

XRP struggles to stay afloat, with key support levels crumbling due to volatility from macroeconomic factors, including United States President Donald Trump's reciprocal tariffs kicking in on Wednesday.

Read more
Tariff rollercoaster continues as China slapped with 104% levies

Tariff rollercoaster continues as China slapped with 104% levies

The reaction in currencies has not been as predictable. The clear winners so far remain the safe-haven Japanese yen and Swiss franc, no surprises there, while the euro has also emerged as a quasi-safe-haven given its high liquid status.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025