GBP/USD churns near 1.3700 ahead of BoE rate call
- GBP/USD remains stuck in a rut just below 1.3700.
- Momentum remains thin as markets brace for the latest BoE rate call.
- US data remains delayed, but a new NFP release date gives investors something to look forward to.
GBP/USD remains trapped in a near-term cycling pattern on Wednesday, continuing to churn aimlessly between 1.3700 and 1.3650. Cable traders are unlikely to pick a meaningful direction until after the Bank of England’s (BoE) latest interest rate decision, due during Thursday’s London market session. However, it is unlikely that the BoE’s Monetary Policy Committee (MPC) will deliver anything of note that will actually shift long-term fundamentals.
After a razor-thin 5-4 vote to trim interest rates another 25 bps in December, the MPC is broadly expected to hold interest rates steady on Thursday; rate markets show a scant 4.1% chance of a February interest rate cut from the BoE.
On the American side, US ADP Employment Change and Initial Jobless Claims are due later on Thursday. However, traders will be looking ahead to the latest Nonfarm Payrolls (NFP) figures from January, which were postponed until February 11 thanks to the latest partial US government funding shutdown, which was once again avoided in the eleventh hour.
GBP/USD daily chart
Technical Analysis:
In the daily chart, GBP/USD trades at 1.3652. The 50-day exponential moving average rises to 1.3492 and remains above the 200-day at 1.3340, underscoring a bullish bias. Price holds above the faster average as both slopes point higher, keeping pullbacks contained and favoring further upside.
Stochastic (14,5,5) has retreated from overbought and prints 67.88, indicating momentum has cooled while staying positive. A renewed uptick would keep the advance in gear, while a drop below the 50 line could trigger consolidation toward the rising 50-day EMA at 1.3492.
In the 4-hour chart, GBP/USD trades at 1.3652. The 200-period exponential moving average rises to 1.3534 and underpins a bullish bias, with price holding decisively above this trend filter. Dips toward this average would meet initial support, while sustained trade above it keeps upside traction intact.
Momentum cools as the Stochastic (14,5,5) retreats from the 70s to the mid-50s, indicating fading immediate impulse rather than a trend break. A turn higher in the oscillator would re-energize bids and keep the topside in focus. A deeper slide toward the 40 area would point to extended consolidation before trend resumption.
In the 15-minute chart, GBP/USD trades at 1.3652. Price holds below a declining 200-EMA at 1.3689, maintaining an intraday bearish bias. The average continues to slope lower, highlighting persistent supply on rebounds. Stochastic (14,5,5) has eased from a brief push above the 50 line toward the mid-40s, flagging waning recovery momentum. Below the average, sellers keep control and dips remain favored.
The setup stays fragile while the 200-EMA trends lower and caps bounces. A decisive push back above the 50 line on Stochastic would improve momentum, whereas another roll-over from this area would keep pressure on the downside. A close above 1.3689 would be needed to neutralize the immediate bearish tone.
(The technical analysis of this story was written with the help of an AI tool.)
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, 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).
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.
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