GBP/USD hits a second day of downside ahead of key US data

GBP/USD fell for a second consecutive session as Cable bets pull back.
The UK side of the data docket remains light for the remainder of the week.
Fed Meeting Minutes revealed a staunchly apprehensive Fed, key US data ahead.

Joshua Gibson FXStreet

GBP/USD pared further gains on Wednesday, stumbling for a second straight session and easing back below 1.3500 after a failed attempt to recapture 1.3600 earlier this week. Sterling markets are pulling back from the top end of a bull run that dragged Cable into multi-year highs, however momentum still favors Pound Sterling bidders.

The Federal Reserve's (Fed) latest Meeting Minutes from the Federal Open Market Committee's (FOMC) rate meeting on May 6-7 revealed that the Fed's wait-and-see approach has deep roots. Policymakers at the latest Fed meeting noted that the US Dollar's (USD) safe-haven status has taken a hit recently. They cautioned that a more "durable shift" in the Greenback's status could have lasting impacts on the US economy.

Nearly all FOMC members at the May rate meeting agreed that inflation risks could prove to be more "persistent than expected". With Fed staff directly citing tariff impacts as a key driver in the FOMC's weakening outlook on the US economy, the FOMC has laid decaying US economic conditions and the hazy outlook on inflation and growth at the feet of the Trump administration's whipsaw tariff policies.

The rest of the trading week remains heavy on the US side. US Q1 Gross Domestic Product (GDP) growth is slated for Thursday. Friday will wrap up the trading week with US Personal Consumption Expenditure Price Index (PCE) inflation data for April. Markets are hoping for a continued easing in key inflation metrics before the fallout from the Trump administration’s tariff policies begins to leak into headline datasets.

GBP/USD price forecast

Cable remains caught in a bearish downturn with bids sinking into 1.3450. However, price action remains firmly planted in bull country, with daily candlesticks running well north of the 50-day Exponential Moving Average (EMA) near 1.3210.

Overall, the Pound Sterling has been on a tear in 2025, rising 11.3% bottom-to-top from mid-January’s multi-month bottoms at the 1.2100 handle. Cable has entirely reversed losses through the last quarter of 2024, rising to multi-year highs near 1.3450 this week.

GBP/USD daily chart

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

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

160.00: USD/JPY back near intervention territory after upbeat US jobs report

US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added. The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows. Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.

Gold targets $4,300 amid stronger Dollar

Gold faces increasing selling interest and navigates the area of three-month lows near the $4,300 mark per troy ounce on Friday. The precious metal’s decline comes as traders assess the stronger-than-expected NFP, while the bid bias in the Greenback and higher US Treasury yields also collaborate with the retracement.

Cardano hits five-year low even as Hoskinson clarifies "break" isn't an exit

Cardano (ADA) price is down 10% at press time on Friday, extending losses over 30% so far this week amid Charles Hoskinson's clarification that "break" isn't an exit.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.