GBP/USD Forecast: Pound Sterling sellers hesitate as key support holds
- GBP/USD rebounds toward 1.2950 after posting losses for two consecutive days.
- The near-term technical outlook points to a lack of seller interest.
- UK and US PMI data could trigger a short-lasting reaction in the pair.
GBP/USD closed in negative territory on Thursday and Friday to end the previous week virtually unchanged. The pair gains traction in the European morning and recovers toward 1.2950.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.17% | -0.20% | 0.25% | -0.15% | -0.27% | 0.03% | -0.05% | |
| EUR | 0.17% | -0.13% | -0.10% | 0.07% | -0.11% | 0.24% | 0.16% | |
| GBP | 0.20% | 0.13% | 0.45% | -0.43% | -0.01% | 0.38% | 0.19% | |
| JPY | -0.25% | 0.10% | -0.45% | -0.39% | -0.54% | -0.21% | -0.32% | |
| CAD | 0.15% | -0.07% | 0.43% | 0.39% | -0.07% | 0.17% | 0.09% | |
| AUD | 0.27% | 0.11% | 0.01% | 0.54% | 0.07% | 0.37% | 0.30% | |
| NZD | -0.03% | -0.24% | -0.38% | 0.21% | -0.17% | -0.37% | -0.01% | |
| CHF | 0.05% | -0.16% | -0.19% | 0.32% | -0.09% | -0.30% | 0.00% |
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 renewed US Dollar (USD) weakness at the beginning of the week helps GBP/USD hold its ground, as the market mood improves on easing fears over aggressive reciprocal US tariffs.
The White House is reportedly adjusting its approach to tariffs set to take effect on April 2, likely omitting a set of industry-specific tariffs while applying reciprocal tariffs aimed at countries with significant trade ties to the US, according to the Wall Street Journal. Similarly, Bloomberg reported US President Donald Trump's tariffs are expected to be more targeted than initially thought. Following these headlines, US stock index futures rise between 0.8% and 1.0% in the European morning.
Preliminary March Purchasing Managers Index (PMI) data from the UK and the US will be watched closely by market participants later in the day. In case the Composite PMI in the UK drops below 50 to show a contraction in the private sector's business activity, Pound Sterling could come under renewed selling pressure with the immediate reaction. On the flip side, the USD could regather its strength in the second half of the day in case PMI data from the US arrive above 50.
GBP/USD Technical Analysis
GBP/USD edges higher after coming within a touching distance of the lower limit of the ascending regression channel. Additionally, the Relative Strength Index (RSI) indicator on the four-hour chart rises toward 50, highlighting sellers' hesitancy.
On the upside, 1.2960 (20-period Simple Moving Average, 50-period SMA) aligns as immediate resistance before 1.3000 (mid-point of the ascending channel, static level) and 1.3040 (static level).
Looking south, supports could be seen as 1.2900-1.2890 (static level, 100-period SMA) and 1.2860 (lower limit of the ascending channel).
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.
