GBP/USD Forecast: Pound Sterling sellers hesitate ahead of US data

GBP/USD trades near 1.3500 in the European session on Thursday.
Buyers continue to defend key technical support levels.
Weekly Jobless Claims data and Q2 GDP revision will be featured in the US economic calendar.

Eren Sengezer FXStreet

GBP/USD registered marginal gains for the second consecutive day on Wednesday and stabilized near 1.3500 in the European session on Thursday. The pair's technical outlook highlights sellers' hesitancy as key support levels remain intact.

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 Euro.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.64%	0.12%	0.21%	-0.38%	-0.44%	0.04%	-0.07%
EUR	-0.64%		-0.52%	-0.50%	-1.01%	-1.00%	-0.60%	-0.71%
GBP	-0.12%	0.52%		-0.12%	-0.49%	-0.54%	-0.08%	-0.19%
JPY	-0.21%	0.50%	0.12%		-0.54%	-0.61%	-0.10%	-0.16%
CAD	0.38%	1.01%	0.49%	0.54%		-0.03%	0.45%	0.31%
AUD	0.44%	1.00%	0.54%	0.61%	0.03%		0.47%	0.35%
NZD	-0.04%	0.60%	0.08%	0.10%	-0.45%	-0.47%		-0.11%
CHF	0.07%	0.71%	0.19%	0.16%	-0.31%	-0.35%	0.11%

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).

In the American session on Wednesday, the modest improvement seen in market sentiment made it difficult for the US Dollar (USD) to gather strength against its rivals, opening the door for a recovery in GBP/USD.

Early Thursday, US stock index futures trade mixed, making it difficult for GBP/USD to gather bullish momentum.

Later in the day, the US Bureau of Economic Analysis (BEA) will publish a revision to the second-quarter Gross Domestic Product (GDP) data. The BEA's first estimate showed that the US economy grew at an annual rate of 3% in Q2. A positive revision could be supportive for the USD and cap GBP/USD's upside. On the other hand, the USD could come under renewed selling pressure with the immediate reaction if the GDP growth is revised downward.

The US economic calendar will also feature the weekly Initial Jobless Claims data. Ahead of Friday's Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's (Fed) preferred gauge of inflation, however, investors could refrain from taking large positions.

GBP/USD Technical Analysis

GBP/USD closed above the 100-day Simple Moving Average (SMA), currently located near 1.3430, after briefly dipping below that level on Wednesday. Additionally, the Relative Strength Index (RSI) indicator on the 4-hour chart holds above 50, reflecting sellers' hesitancy.

On the upside, 1.3540 (Fibonacci 61.8% retracement of the latest downtrend) could be seen at the next resistance level before 1.3600 (static level, round level) and 1.3640 (Fibonacci 78.6% retracement). Looking south, 1.3460 (Fibonacci 50% retracement) could be seen as an interim support level ahead of 1.3430 (100-day SMA, 200-period SMA on the 4-hour chart) and 1.3400-1.3390 (static level, Fibonacci 38.2% retracement of the latest downtrend).

Pound Sterling FAQs

What is the Pound Sterling?

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).

How do the decisions of the Bank of England impact on the Pound Sterling?

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.

How does economic data influence the value of the Pound?

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.

How does the Trade Balance impact the Pound?

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.

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