- The Pound Sterling edges lower in its key pairs on Monday.
- From a technical perspective, GBP/USD is pulling back within an established short-term uptrend.
The Pound Sterling (GBP) trades marginally lower in its most heavily traded pairs on Monday after a mixed start and despite the run of positive economic data out of the UK of late.
Pound Sterling mixed but resilient after string of positive data
The Pound Sterling is trading lower at the start of the new week. Recent assessments of the UK economy have been mostly positive, with some economists describing it as striking a “Goldilocks” balance between “not too cold” and “not too hot”.
Headline Inflation is hovering around the Bank of England’s (BoE) 2.0% target, and Services inflation – which thus far has remained particularly high – fell to 5.2% in July from 5.7% previously, working its way back to a long-run average of around 3.5%.
UK Retail Sales data last week showed a rebound in July of 0.5% from a negative 0.9% in June. The Unemployment Rate fell to 4.2% in Q2 from 4.4% in Q1, and Gross Domestic Product (GDP) rose 0.9% from 0.3% over the same period.
Lower headline inflation and easing in stubbornly high Services inflation led the BoE to cut interest rates at its August meeting to 5.00% from 5.25%. Lower interest rates tend to depress GBP’s value by reducing foreign capital inflows. Market-based gauges of whether interest rates will fall any further are giving a slightly lower than 50% probability of a further 0.25% cut in September. Economists at Capital Economics expect a total of two more 0.25% cuts before the end of the year.
Sterling higher versus the USD but falls against JPY
Against the US Dollar, GBP is flat, trading in the 1.2940s on Monday after a strong start. GBP/USD traded higher due to broad-based USD weakness, following comments from the President of the Federal Reserve (Fed) Bank of Chicago Austan Goolsbee on Friday, who said that the US labor market and some other leading economic indicators were “flashing warning signs” including rising levels of credit card delinquencies. His words reawakened recession concerns, weighing on the US currency.
EUR/GBP is seesawing between tepid gains and losses with little new information or data to drive either of the currencies in the pair.
The Pound is falling against the Japanese Yen (JPY) after data out of Japan late Sunday evening showed Machinery Orders in Japan rebounding by a stronger-than-expected 2.1% MoM in June after registering a 3.2% decline in the previous month.
Japanese 10-year Government Bond yields rose to 0.9% following the data, helping to support the Yen to which they are highly correlated. The JPY had already been rallying after Japanese GDP data out last week surprised to the upside, showing the economy expanded 0.8% QoQ in Q2, reversing the 0.6% contraction in Q1 and beating expectations of 0.5%.
The Bank of Japan (BoJ) also surprised markets in July after deciding to raise interest rates from a 0.0% -0.10% band to 0.25% due to increasing inflationary pressures. This comes after successful spring wage negotiations gave workers more disposable income. The expectation is that the BoJ will raise rates even higher before the end of the year.
Technical Analysis: GBP/USD continues short-term rally
GBP/USD pulls back within a short-term uptrend, however, given “the trend is your friend” it is biased to resume its uptrend eventually.
GBP/USD 4-hour Chart
GBP/USD will probably eventually extend higher to the next target at 1.3042 (July 17 high).
The Relative Strength Index (RSI) has risen into the overbought zone, indicating an increasing risk the pair could pull back. Former highs at 1.2940 could provide a support level for any pull back that materializes. The round number of 1.2900 is another level the pair might fall to in the event of a correction.
The medium and longer-term trends remain opaque and more “sideways” than directional, with price action trapped in the range between 1.2300 and 1.3042 since November 2023.
Economic Indicator
Gross Domestic Product (QoQ)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Thu Aug 15, 2024 06:00 (Prel)
Frequency: Quarterly
Actual: 0.6%
Consensus: 0.6%
Previous: 0.7%
Source: Office for National Statistics
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

AUD/USD: Extra gains need to clear 0.6400
AUD/USD rose for the third day in a row, approaching the key 0.6400 resistance on the back of the acute pullback in the US Dollar amid mounting recession concerns and global trade war fear.

EUR/USD: Powell and the NFP will put the rally to the test
EUR/USD gathered extra steam and advanced to multi-month peaks near 1.1150, although the move fizzled out somewhat as the NA session drew to a close on Thursday.

Gold holds positive ground above $3,100, all eyes on US NFP data
Gold price recovers some lost ground to near $3,115 during the late American session on Thursday after facing some profit-taking in the previous session. Escalating concerns over a global trade war and ongoing geopolitical risks boost the Gold price, a traditional safe-haven asset.

Ethereum: Short-term holders may not impact ETH's price, Pectra mainnet upgrade set for May 7
Ethereum declined by 3% on Thursday as market participants continued to react to President Donald Trump's announcements regarding reciprocal tariffs. However, the selling pressure may not persist since most ETH short-term holders already sold their assets in March.

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.