GBP/USD Price Forecast: Bullish outlook prevails above 1.3600, UK GDP data looms
- GBP/USD gathers strength around 1.3635 in Thursday’s early European session.
- Traders await the preliminary reading of the UK GDP report for Q4, which is due on Thursday.
- The bullish outlook of the pair remains intact above the key 100-day EMA.
- The initial support level is seen at 1.3618; the first upside barrier to watch is 1.3713.
The GBP/USD pair gains ground near 1.3635, snapping the two-day losing streak during the early European session on Thursday. The preliminary reading of UK Gross Domestic Product (GDP) for the fourth quarter (Q4) will be closely watched later on Thursday. The UK economy is estimated to grow 0.2% QoQ in Q4, versus 0.1% in Q1. In case of a stronger-than-expected outcome, this could boost the Cable against the US Dollar (USD).
On the other hand, traders trimmed bets for a March Federal Reserve (Fed) rate cut after the upbeat US Nonfarm Payrolls (NFP) report. This, in turn, might cap the upside for the major pair. The US NFP rose by 130,000 in January, better than the estimates of 70,000, according to the Bureau of Labor Statistics on Wednesday. The Unemployment Rate fell to 4.3% in January from 4.4% in December, below the market consensus of 4.4%.
Technical Analysis:
In the daily chart, GBP/USD remains above the rising 100‑EMA at 1.3447, sustaining a bullish bias. The average continues to firm, reinforcing demand on dips. RSI at 53.6 turns higher and holds above 50, confirming improving momentum. The Bollinger midline at 1.3618 underpins the pullback, while the February 11 high of 1.3713 caps near-term advances. The additional upside filter to watch is the upper band at 1.3873.
Bollinger Bands have widened and price hovers just above the middle line, indicating building upside pressure under expanding volatility. Continuation toward the band top could follow if buyers maintain control, while a daily close beneath the lower band would dent the structure and invite additional downside.
(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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