- GBP/USD started 2024 on a positive note.
- Auspicious results from the UK docket reinforced the upside bias in spot.
- The key 200-week SMA continues to cap the upside.
Price action around the Pound Sterling (GBP) was highly influenced by the US Dollar (USD) dynamics in the first week of the new trading year, while market participants continued to shrug off the holiday mood. GBP/USD navigated choppy waters initially, although it made a U-turn and the pair managed to advance in the subsequent sessions, largely surpassing the 1.2700 barrier on Friday.
Despite Friday’s post-NFP knee-jerk reaction, the Cable and the rest of the risk-associated assets grabbed fresh oxygen and extended the positive streak for the fourth week in a row in response to the sudden change of heart around the Greenback. This was accompanied by a U-turn in US yields and increasing speculation of interest rate cuts as soon as in March.
The week that was: GBP/USD now looks to revisit 1.2800 and beyond
The weekly recovery in the quid followed firm prints from both Manufacturing and Services PMIs in the UK for the month of December, which somehow managed to offset the bullish momentum in the US Dollar that was happening at the same time.
Additional encouraging data in the UK docket saw a recovery in house prices tracked by Halifax as well as a decent bounce in the Construction PMI during December.
Gains in the Cable, in the meantime, were bolstered by the resurgence of a strong upward trend in the UK 10-year gilt yields, which climbed to multi-week highs and approached the key 4.0% barrier towards the end of the week, an area last visited in mid-December.
Still around the UK money markets, investors continued to reprice the likelihood of interest-rate cuts by the Bank of England (BoE) later in the year. Currently, these expectations seem to gyrate around 120 basis points (bps) of rate cuts in 2024, a tad lower than the previous estimate.
A glimpse at the upcoming events across the Channel suggests that investors’ attention should be focused on the release of UK GDP figures, Industrial and Manufacturing Production for November, all due in the latter half of the next week.
GBP/USD: Technical Outlook
GBP/USD remains supported by the vicinity of the 1.2600 region. In case sellers regain control, there is an immediate contention at the so far 2024 low of 1.2610 recorded on January 2. If the Cable breaks below this level, it could prompt a test of the 200-day Simple Moving Average (SMA) at 1.2532 to emerge on the horizon ahead of the December 2023 low of 1.2500 (noted on December 13). Further south aligns the interim 55-day and 100-day SMAs at 1.2484 and 1.2446, respectively, prior to the weekly low of 1.2187 of November 10, the October low of 1.2037 (October 3), the crucial 1.2000 threshold, and finally, the 2023 bottom of 1.1802, clinched on November 10.
If the upward trend picks up pace, the pair might revisit the December peak of 1.2827 (observed on December 28). It could then approach the weekly high of 1.2995 from July 27, 2023, just slightly above the significant threshold of 1.3000.
The daily Relative Strength Index (RSI) improves to 58, and the MACD points to a near-term rebound.
Pound Sterling price in the last 7 days
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies in the last 7 days. Pound Sterling was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.78% | -0.22% | 0.77% | 1.39% | 1.88% | 1.08% | 0.36% | |
| EUR | -0.78% | -0.99% | 0.00% | 0.62% | 1.12% | 0.31% | -0.42% | |
| GBP | 0.22% | 1.00% | 0.99% | 1.61% | 2.09% | 1.30% | 0.58% | |
| CAD | -0.78% | 0.01% | -1.00% | 0.62% | 1.12% | 0.32% | -0.40% | |
| AUD | -1.41% | -0.63% | -1.63% | -0.62% | 0.49% | -0.34% | -1.03% | |
| JPY | -1.91% | -1.11% | -2.14% | -1.11% | -0.49% | -0.81% | -1.53% | |
| NZD | -1.10% | -0.31% | -1.32% | -0.32% | 0.30% | 0.81% | -0.72% | |
| CHF | -0.38% | 0.42% | -0.60% | 0.40% | 1.02% | 1.53% | 0.71% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
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 retreats below 1.0550 as markets turn cautious
EUR/USD trades in negative territory below 1.0550 on Tuesday. The pair eases due to fading market's optimism over likely Chinese stimulus, allowing the US Dollar to hold its ground ahead of Wednesday's key November inflation data.
GBP/USD stabilizes near 1.2750 ahead of this week's key US data
GBP/USD fluctuates in a relatively tight channel at around 1.2750 on Tuesday as the cautious market mood makes it difficult for the pair to gain traction. Nevertheless, investors refrain from taking large positions ahead of key data releases from the US, limiting the pair's volatility.
Gold clings to modest daily gains above $2,670
Gold builds on Monday's gains and trades above $2,670 on Tuesday, supported by the renewed optimism about an improving Chinese economic outlook. Meanwhile, the benchmark 10-year US Treasury bond yield stays in positive territory above 4.2%, capping XAU/USD's upside.
Altcoins LTC, CRV and ONDO recover after retesting key support levels
Litecoin, Curve DAO and Ondo prices recover on Tuesday after retesting and bouncing off key support levels following Monday’s double-digit correction. The technical outlook suggests a further recovery ahead, with the Moving Average Convergence Divergence momentum indicator supporting the rebound.
How the US-China trade dispute is redefining global trade
Since Donald Trump took office in 2017, trade flows and market shares have changed substantially. We think that shift is set to continue under looming tariffs and a new protectionist environment.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.