- GBP/USD trades in positive territory slightly below 1.2400 early Friday.
- PMI reports from the UK and the US could drive the pair's action heading into the weekend.
- The technical outlook suggests that buyers retain control in the near term.
GBP/USD holds its ground early Friday and trades in positive territory slightly below 1.2400 after posting modest daily gains on Thursday. Market participants await preliminary January PMI reports from the UK and the US.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.80% | -1.75% | -0.54% | -0.86% | -1.95% | -2.02% | -0.85% | |
| EUR | 1.80% | -0.02% | 1.19% | 0.84% | -0.10% | -0.34% | 0.83% | |
| GBP | 1.75% | 0.02% | 1.14% | 0.85% | -0.06% | -0.32% | 0.85% | |
| JPY | 0.54% | -1.19% | -1.14% | -0.33% | -1.37% | -1.59% | -0.50% | |
| CAD | 0.86% | -0.84% | -0.85% | 0.33% | -1.03% | -1.17% | -0.00% | |
| AUD | 1.95% | 0.10% | 0.06% | 1.37% | 1.03% | -0.34% | 0.85% | |
| NZD | 2.02% | 0.34% | 0.32% | 1.59% | 1.17% | 0.34% | 0.99% | |
| CHF | 0.85% | -0.83% | -0.85% | 0.50% | 0.00% | -0.85% | -0.99% |
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 positive shift seen in risk mood during the Asian trading hours caused the US Dollar (USD) to weaken against its rivals and helped GBP/USD gain traction. US President Donald Trump said in an interview that he would rather not have to use tariffs on China, easing concerns over an aggressive tariff policy stoking inflation and hurting the USD.
In the UK, S&P Global/CIPS Composite PMI is forecast to edge lower to 50 in January's flash estimate from 50.4 in December. A reading below 50, which would point to a contraction in the private sector's economic activity, could weigh on Pound Sterling and trigger a leg lower in GBP/USD with the immediate reaction.
In the second half of the day, markets will pay close attention to US PMI figures. S&P Global Manufacturing PMI is seen improving slightly to 49.6 from 49.4 in December. The USD could benefit from a print above 50 and make it difficult for GBP/USD to hold its ground.
Investors will also keep a close eye on the risk perception heading into the weekend. At the time of press, US stock index futures were down between 0.1% and 0.2%. If Wall Street's main indexes turn north after the opening bell, the USD could struggle to outperform its rivals.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) on the 4-hour chart holds comfortably above 60, reflecting the bullish stance in the near term. On the upside, the Fibonacci 50% retracement level of the latest downtrend and the 200-period Simple Moving Average (SMA) form a strong resistance area at 1.2450-1.2460. In case GBP/USD manages to clear that hurdle, 1.2500 (round level, static level) could be seen as next resistance before 1.2530 (Fibonacci 61.8% retracement).
On the downside, 1.2370 (Fibonacci 38.2% retracement) aligns as immediate support before 1.2310 (100-period SMA) and 1.2260 (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
Editors’ Picks
EUR/USD struggles to find upside traction near 1.0950
EUR/USD remains below the 1.1000 barrier and trades with humble losses on the back of the acceptable rebound in the Greenback, as market participants continue to adjust to Trump's announcement of a 90-day pause on reciprocal tariffs on non-retaliating countries.
GBP/USD retakes 1.2800 and above
GBP/USD manages to keep the bullish bias despite the decent bounce in the US Dollar, navigating the area above 1.2800 the figure as investors continue to assess the ongoing US-China trade war. US doubles the bet, announced 125% levies on Chinese imports.
Gold remains bid, refocuses on $3,100
Prices of Gold now regain some balance and approach the $3,100 zone per troy ounce on Wednesday after President Trump announced a 90-day pause on reciprocal and 10% tariffs. FOMC Minutes pointed to further caution from officials.
Dow Jones Industrial Average rockets 6% higher on tariff suspension
The Dow Jones Industrial Average (DJIA) skyrocketed on Wednesday, surging over 6% on the day and returning to the 40,000 handle after the Trump administration announced yet another pivot on its own tariff policies.
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.
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.