GBP/USD weakens to near 1.3550 on modest US Dollar strength

GBP/USD softens to around 1.3555 in Monday’s early Asian session.
A cautious mood ahead of the US-Ukraine meeting underpins the US Dollar.
UK economy grows by better-than-expected 0.3% QoQ in the second quarter.

Lallalit Srijandorn FXStreet

The GBP/USD pair loses ground to near 1.3555 during the early Asian session on Monday, pressured by a firmer US Dollar (USD). Markets turn cautious ahead of a meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy later on Monday. The UK July Consumer Price Index (CPI) inflation report will be released on Tuesday.

The Greenback strengthens as caution prevails before Trump’s talks with Zelenskiy. Traders await the Trump-Zelenskiy meeting in Washington on Monday, as it might offer some hints about a ceasefire deal or new sanctions on Russia or buyers of its crude. Any signs of persistent geopolitical tensions might boost the safe-haven demand and create a headwind for the major pair in the near term.

Nonetheless, the upbeat UK Gross Domestic Product (GDP) report for the second quarter (Q2) could provide some support to the Cable. The UK economy slowed less than expected in Q2 despite the shock of US trade tariffs and a weaker jobs market, rising 0.3% QoQ versus a 0.7% growth in Q1. This figure came in stronger than the expectation of a 0.1% expansion in the reported period.

The attention will shift to the UK CPI inflation data on Tuesday for a fresh impetus. The core CPI is expected to show an increase of 3.7% YoY in July. If the data shows a hotter-than-expected outcome, this could reduce market expectations for the Bank of England (BoE) to cut rates in September, which might lift the GBP against the USD. Markets are now fully pricing another reduction only in February 2026, according to LSEG data.

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

Japanese Yen weakens to two-year lows, targets 162.00

USD/JPY extends its advance well north of the 161.00 barrier on Thursday, always on the back of the continuation of the US Dollar's post-Fed rebound and despite warnings from the BoJ of a potential intervention at any time. Next on the upside for spot comes the July 2024 peak in levels just shy of 162.00 the figure.

AUD/USD trims gains, challenges 0.7000

AUD/USD now alternates gains with losses just above the key 0.7000 level ahead of the opening bell in Asia. The pair clinches its third consecutive daily retracement, always on the back of the persistent move higher in the Greenback, particularly following the Fed’s hawkish hold on Wednesday.

Gold drops to daily lows near $4,200

Gold struggles to attract buyers on Thursday, trading closer to the $4,200 mark per troy ounce. The yellow metal adds to Wednesday’s pullback and slips back to multi-day lows in response to the stronger US Dollar following the Fed’s hawkish hold on Wednesday.

XRP vulnerable below key EMA resistance levels

Ripple (XRP) ticks down below $1.20 with short-term support at $1.16 intact at the time of writing on Thursday. An early-week rally was rejected at $1.28, weighing on sentiment as traders broadly de-risked.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.

The next big AI trade may not be about chips or software

Artificial intelligence has already created some of the biggest winners in modern market history. Chipmakers have surged, data centre construction is booming, and electricity demand forecasts are changing globally.