- GBP/USD remains under some selling pressure for the second straight day on Wednesday.
- A combination of factors lends support to the USD and drags spot prices to a two-week low.
- The technical setup warrants caution for bears and before positioning for additional losses.
The GBP/USD pair drifts lower for the second successive day – also marking the fourth day of a negative move in the previous five – and drops to a nearly two-week low during the Asian session on Wednesday. Spot prices currently trade just below the 1.2900 mark, down 0.15% for the day amid a modest US Dollar (USD), though any meaningful depreciating move seems elusive.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, climbed to a two-week high amid an uptick in the US Treasury bond yields. Apart from this, a softer risk tone further benefits the safe-haven buck, though bets for an imminent start of the Federal Reserve's (Fed) rate-cutting cycle in September cap gains. Apart from this, diminishing odds of an August rate cut by the Bank of England (BoE) should act as a tailwind for the British Pound (GBP) and the GBP/USD pair ahead of flash PMIs.
From a technical perspective, spot prices currently trade just above the 38.2% Fibonacci retracement level of the recent rally from the June monthly swing low. The said support is pegged near the 1.2880 region, below which a fresh bout of selling could drag the GBP/USD pair to the 1.2830-1.2835 area, or the 50% Fibo. level. The next relevant support is seen near the 1.2800 mark ahead of the 61.8% Fibo. level, around the 1.2780-1.2775 region. A convincing break below will be seen as a fresh trigger for bears and pave the way for deeper losses.
On the flip side, any positive beyond the 1.2900 mark is likely to attract fresh buyers and remain capped near the 1.2930-1.2940 resistance or the 23.6% Fibo. level support breakpoint. Some follow-through buying will suggest that the recent corrective slide has run its course and shift the bias back in favor of bulls. Given that oscillators on the daily chart are still holding in positive territory, the GBP/USD pair might then aim back to reclaim the 1.3000 psychological mark and retest the 1.3045 region, or the one-year peak touched last week.
GBP/USD daily chart
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, aka ‘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 climbs to multi-month high above 1.1000 on broad USD weakness
EUR/USD extends its rally to a fresh six-month high above 1.1000 in the European session on Thursday. The pair benefits from the intense selling pressure surrounding the US Dollar after US President Trump unveiled aggressive tariffs on the "Liberation Day." Markets await mid-tier US data releases.
GBP/USD jumps above 1.3100 ahead of US data
GBP/USD is extending its upbeat momentum above 1.3100 in European trading on Thursday as the US Dollar slumps to a fresh YTD low. Worries about a tariff-driven US economic slowdown lift Fed rate cut bets and weigh on the Greenback. The focus now remains on the US data for further impetus.
Gold price moves further away from all-time peak; downside potential seems limited
Gold price extends its steady intraday pullback from the all-time peak touched this Thursday, though it manages to hold above the $3,100 mark through the early European session. Bullish traders opt to take some profits off the table and lighten their bets around the commodity amid slightly overbought conditions.
Bitcoin price reacts as Gold sets fresh record highs after Trump’s reciprocal tariffs announcement
Bitcoin price plunges towards $82,000 as Gold soars past $3,150 after US President Donald Trump imposed new tariffs on Israel and UK, triggering global markets turbulence.
Trump’s “Liberation Day” tariffs on the way
United States (US) President Donald Trump’s self-styled “Liberation Day” has finally arrived. After four straight failures to kick off Donald Trump’s “day one” tariffs that were supposed to be implemented when President Trump assumed office 72 days ago, Trump’s team is slated to finally unveil a sweeping, lopsided package of “reciprocal” tariffs.
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.