Market news
10.07.2024, 15:00

GBP/USD Price Analysis: Advances steadily above 1.2800 on BoE’s Pill remarks

  • GBP/USD rises to 1.2842, boosted by BoE's Huw Pill's caution against basing policy on single data points.
  • Bullish momentum intact, targeting June 12 high of 1.2861 and YTD high of 1.2894.
  • Key support levels: 1.2800, 1.2755/70, and 1.2690 (50-day moving average) for potential reversals.

The Pound Sterling resumed its uptrend on Wednesday and rallied sharply on Bank of England Chief Economist Huw Pill's remarks that the Monetary Policy Committee (MPC) should be cautious in seeing a single piece of data as a trigger for policy reassessment. Hence, the GBP/USD trades at 1.2842, posting gains of 0.44%.

GBP/USD Price Analysis: Technical outlook

From a technical standpoint, the GBP/USD resumed its uptrend after bouncing off weekly lows set on Tuesday of around 1.2779, with buyers stepping in and lifting the exchange rate. Momentum favors buyers, as depicted by the Relative Strength Index (RSI), and the pair might test the year-to-date (YTD) high in the near term.

The GBP/USD first resistance would be the June 12 high at 1.2861. Once cleared the next stop will be the YTD high at 1.2894, followed by the 1.2900 figure and the 1.3000 mark.

Conversely, if GBP/USD shifts negatively and drops below 1.2800, the first support would be the confluence of two support trendlines at around 1.2755/70, followed by the 50-day moving average (DMA) at 1.2690. A change of trend is seen once the pair tumbles below the June 27 cycle low of 1.2612.

GBP/USD Price Action – 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.

British Pound PRICE Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.

USD   -0.09% -0.35% 0.19% -0.14% -0.03% 0.74% 0.20%
EUR 0.09%   -0.25% 0.32% -0.03% 0.05% 0.81% 0.29%
GBP 0.35% 0.25%   0.56% 0.23% 0.30% 1.06% 0.52%
JPY -0.19% -0.32% -0.56%   -0.31% -0.24% 0.49% -0.03%
CAD 0.14% 0.03% -0.23% 0.31%   0.10% 0.85% 0.30%
AUD 0.03% -0.05% -0.30% 0.24% -0.10%   0.75% 0.20%
NZD -0.74% -0.81% -1.06% -0.49% -0.85% -0.75%   -0.54%
CHF -0.20% -0.29% -0.52% 0.03% -0.30% -0.20% 0.54%  

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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).


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