GBP/USD Price Forecast: Downward-sloping trendline near 1.3470 remains key barrier
- GBP/USD falls to near 1.3420 as the British Pound remains weak and the US Dollar extends its recovery.
- Investors await key US economic releases, notably the US NFP data for July.
- BoE’s Bailey didn’t want the public to have an impression that the central bank is edging towards a hike.
The British pound (GBP) faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar (USD) during the European trading session on Tuesday.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.08% | 0.35% | 0.12% | -0.22% | 0.13% | -0.01% | |
| EUR | -0.03% | 0.03% | 0.36% | 0.08% | -0.26% | 0.08% | -0.02% | |
| GBP | -0.08% | -0.03% | 0.32% | 0.06% | -0.29% | 0.04% | -0.06% | |
| JPY | -0.35% | -0.36% | -0.32% | -0.25% | -0.58% | -0.27% | -0.25% | |
| CAD | -0.12% | -0.08% | -0.06% | 0.25% | -0.33% | -0.01% | -0.11% | |
| AUD | 0.22% | 0.26% | 0.29% | 0.58% | 0.33% | 0.33% | 0.19% | |
| NZD | -0.13% | -0.08% | -0.04% | 0.27% | 0.01% | -0.33% | -0.09% | |
| CHF | 0.00% | 0.02% | 0.06% | 0.25% | 0.11% | -0.19% | 0.09% |
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).
Pound struggles for support as BoE hawkish split meets dovish Bailey tone
Analysts at Rabobank highlight that “GBP net shorts bounced higher last week ahead of the BoE policy meeting,” underscoring renewed speculative pressure on the Pound. They note that, “despite a more hawkish voting split than the market had expected from the MPC, Governor Bailey’s tone was dovish,” which in their view “suggest[ed] little support for the pound from the BoE.” This combination of positioning and communication leaves Sterling lacking clear policy backing despite the ostensibly firmer stance implied by the vote split.
In BoE Bailey’s last week's press conference, he said, “Please do not leave this room thinking that the Bank of England is edging towards a hike, because frankly, there’s nothing in what I said, and I think any of us have said, along those lines,” Reuters reported.
The selling pressure in the GBP/USD pair is also driven by the higher US Dollar. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly higher to near 100.05. The USD Index recovered sharply on Monday after posting a fresh two-week high at 99.42.
The Greenback extends Monday’s recovery further as investors turn cautious ahead of key United States (US) economic releases.
Investors will pay close attention to the US Nonfarm Payrolls (NFP) data for July on Friday to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy. Fed’s new policy “say no to so-called forward-guidance” has increased investors’ dependency on economic releases to project the Fed’s next policy move.
Later in the day, investors will focus on the US JOLTS Job Openings data for June, which will be published at 14:00 GMT. The data is expected to arrive at 7.45 million fresh jobs, slightly lower than 7.594 million in May.
GBP/USD technical analysis
GBP/USD trades slightly lower at around 1.3423, but is holding above the 20-day exponential moving average (EMA) at 1.3389 and retaining a mildly bullish near-term bias. The pair has reclaimed short-term trend support, while the downward resistance trend line, with a key break reference at 1.3473, now caps the topside.
The Relative Strength Index (RSI) at roughly 54 leans constructive without signaling overbought conditions, suggesting scope for further gains while acknowledging nearby overhead supply.
On the topside, immediate resistance is seen at the trend-line break area near 1.3473, ahead of the psychological level at 13500. On the downside, initial support is provided by the 20-day EMA at 1.3389, which should act as a cushion on pullbacks; a daily close back below this level would weaken the current bullish tone and expose it to the July 28 low at 1.3274.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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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