- GBP/USD struggles to rebound from the monthly low it set on Friday.
- The near-term technical outlook suggests that the bearish bias stays intact.
- The US economic calendar will feature S&P Global PMI data.
GBP/USD lost 0.5% on Thursday and continued to push lower in the early European session on Friday. After touching its lowest level since mid-May at 1.2630, GBP/USD edged higher to the 1.2650 area but the technical outlook doesn't highlight a buildup of recovery momentum.
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 weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.25% | 0.94% | -0.36% | -0.50% | 0.13% | 0.18% | |
| EUR | -0.09% | 0.18% | 0.90% | -0.44% | -0.68% | 0.08% | 0.09% | |
| GBP | -0.25% | -0.18% | 0.78% | -0.63% | -0.88% | -0.15% | -0.07% | |
| JPY | -0.94% | -0.90% | -0.78% | -1.18% | -1.42% | -0.67% | -0.70% | |
| CAD | 0.36% | 0.44% | 0.63% | 1.18% | -0.20% | 0.49% | 0.56% | |
| AUD | 0.50% | 0.68% | 0.88% | 1.42% | 0.20% | 0.82% | 0.81% | |
| NZD | -0.13% | -0.08% | 0.15% | 0.67% | -0.49% | -0.82% | 0.06% | |
| CHF | -0.18% | -0.09% | 0.07% | 0.70% | -0.56% | -0.81% | -0.06% |
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 Bank of England (BoE) announced on Thursday that it left the monetary policy settings unchanged. "June decision was finely balanced as higher-than-expected services inflation reflected factors that would not push up medium-term inflation," the BoE said in its press release. The BoE's optimistic tone on inflation outlook caused Pound Sterling to weaken against its major rivals.
Analysts ING think that the BoE is likely to lower the policy rate in August. "The probability of an August rate cut has inched up from 40% to 60% in the minutes since," they said. "The fact that there wasn't a larger repricing is probably because the Bank didn't change its forward guidance. And for us, August rate cut is our base case."
Early Friday, the UK's Office for National Statistics reported that Retail Sales rose 2.9% on a monthly basis in May. This reading surpassed the market expectation for an increase of 1.5% and helped Pound Sterling show some resilience. Other data from the UK showed that the S&P Global/CIPS Composite PMI declined to 51.7 in June's flash estimate from 53 in May, limiting GBP/USD's rebound.
Ahead of the weekend, S&P Global PMI data from the US will be looked upon for fresh impetus. In case PMI surveys point to an ongoing expansion in the private sector at a healthy pace, with a Composite PMI reading of 52.0 or higher, the USD could gather strength heading into the weekend and weigh on GBP/USD.
GBP/USD Technical Analysis
GBP/USD dropped below the lower limit of the ascending regression channel and the Relative Strength Index (RSI) indicator on the daily chart fell below 40, reflecting the bearish tilt in the short-term outlook.
On the downside, 1.2640 (100-day Simple Moving Average (SMA), Fibonacci 38.2% retracement of the latest uptrend) aligns as key support level. If GBP/USD falls below that level and starts using it as resistance, an extended slide toward 1.2600 (psychological level, static level) and 1.2580 (Fibonacci 50% retracement) could be seen.
The 200-period SMA and the lower limit of the ascending channel forms stiff resistance at 1.2700 before 1.2740 (100-period SMA), 1.2800 (psychological level, 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, aka ‘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
Editors’ Picks
AUD/USD: No respite to the selling pressure
AUD/USD remained well on the defensive, trading in a volatile fashion that saw spot surpass the 0.6100 hurdle just to fade that uptick afterwards and revisit the 0.5980 towards the end of the NA session.
EUR/USD: Tariffs keep the sentiment subdued
EUR/USD added to Friday’s pullback and revisited the sub-1.0900 area, or two-day lows on the back of further gains in the US Dollar and the widespread demand for the safe-haven universe.
Gold recedes to four-week lows near $2,950
The persistent selling pressure is now dragging Gold prices to the area of fresh multi-week troughs near the $2,950 mark per troy ounce, always amid the continuation of the recovery in the US Dollar, highr US yields across the curve and unabated tariff tensions.
Binance founder CZ becomes strategic advisor to Pakistan's Crypto Council
The Pakistan Crypto Council appointed Binance founder and former CEO Changpeng Zhao (CZ) as a strategic advisor on Monday to provide guidance on crypto infrastructure, education and adoption for the Pakistani government and private companies.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
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.