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- Hopes for a rate cut are slowly eroding confidence amid weak data on Wednesday.
- Risk-off market flows take a step higher, but remain weak amid low-level data.
- The latter half of the trading week begins with a flurry of high-level data releases.
The GBP/USD pair fell to familiar near-term lows on Wednesday as tepid market flows boosted the US dollar. The British pound remained firmly on the lower side as the pair struggled to stay above the 1.2600 level.
Wednesday brought little interest in scheduled releases, with the UK absent from the economic calendar and the change in new home sales in the US in May recording a decline of -11.3% month on month compared to 2.0% in the previous month, revised sharply from The preliminary reading of -4.7%.
Forex today: Investors are looking at US personal consumption expenditures
Thursday kicks off a wave of important data after spending most of the first week in stagnation. The Bank of England’s (BoE) latest financial stability report will be published early in the London market session, followed by US durable goods orders, first-quarter GDP revisions, and weekly initial jobless claims.
The US quarter is expected to rise slightly to 1.4% from a preliminary reading of 1.3%, while US durable goods orders for May are expected to contract by -0.1% compared to the previous month’s revised reading of 0.6%. US initial jobless claims for the week ending June 21 are expected to fall slightly to 236K from the previous 238K, but the number is expected to come in above the four-week average of 232.75K.
Friday will conclude the trading week with UK quarterly GDP revisions, which are expected to remain steady at 0.6% on a quarterly basis, with the US personal reading for May. Consumption expenses Price index inflation (PCE). Core PCE inflation is expected to fall year-on-year to 2.6% from the previous 2.8% as market participants hope for more signs of easing inflation to help push inflation. Federal Reserve The Federal Reserve is moving towards lowering interest rates sooner rather than later.
According to the Chicago Mercantile Exchange’s FedWatch tool, market bets on a September 18 interest rate cut by the Federal Open Market Committee (FOMC) have slowly sapped confidence. They are approaching 60% odds of at least a quarter-point rate cut on September 18 after peaking above 70% last week.
The price of the British pound this week
The table below shows the percentage change in the British Pound (GBP) against the major currencies listed this week. The British pound was the strongest against the New Zealand dollar.
| American dollar | euro | GBP | JPY | Bastard – scoundrel | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| American dollar | 0.12% | 0.17% | 0.58% | 0.08% | -0.11% | 0.57% | 0.36% | |
| euro | -0.12% | 0.07% | 0.53% | 0.01% | -0.20% | 0.50% | 0.32% | |
| GBP | -0.17% | -0.07% | 0.39% | -0.06% | -0.28% | 0.42% | 0.24% | |
| JPY | -0.58% | -0.53% | -0.39% | -0.49% | -0.66% | 0.04% | -0.22% | |
| Bastard – scoundrel | -0.08% | -0.01% | 0.06% | 0.49% | -0.18% | 0.48% | 0.30% | |
| Australian dollar | 0.11% | 0.20% | 0.28% | 0.66% | 0.18% | 0.70% | 0.52% | |
| New Zealand dollar | -0.57% | -0.50% | -0.42% | -0.04% | -0.48% | -0.70% | -0.19% | |
| Swiss Franc | -0.36% | -0.32% | -0.24% | 0.22% | -0.30% | -0.52% | 0.19% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you select GBP from the left column and move along the horizontal line to USD, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical forecast for the GBP/USD pair
the cable It extended its two-week decline as the pair fell from its recent swing high to 1.2860, clearing the 50-day Exponential Moving Average (EMA) at 1.2671 and is now within touching range of key technical support from the 200-day EMA at 1.2600. . .
A supply zone above 1.2800 is strongly holding back the upside momentum, and an extended downside decline will push GBP/USD to the April low of 1.2300.
GBP/USD daily chart
Questions and answers about the pound sterling
The British Pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most popular foreign exchange (FX) trading unit in the world, accounting for 12% of all transactions, averaging $630 billion per day, according to 2022 data. Its main trading pairs are GBP/USD, also known as “Cable”. , which represents 11% of foreign currencies, GBP/JPY, or “the dragon” as traders know it (3%), and EUR/GBP (2%). . The pound sterling is issued by the Bank of England (BoE).
The single most important factor affecting the value of the pound is the monetary policy set by the Bank of England. The Bank of England bases its decisions on whether it has achieved its core goal of “price stability” – a stable inflation rate of around 2%. Its primary tool for achieving this is adjusting interest rates. When inflation is too high, the Bank of England will try to rein it in by raising interest rates, which makes it more expensive for individuals and businesses to obtain credit. This is generally positive for the pound, as higher interest rates make the UK a more attractive place for global investors to put their money. When inflation falls too low, it is a sign that economic growth is slowing. In this scenario, the Bank of England will consider cutting interest rates to reduce the cost of credit so that businesses will borrow more to invest in growth-generating projects.
Data releases measure the health of the economy and can affect the value of the British pound. Indicators such as GDP, manufacturing PMIs, services and employment can all influence the direction of the pound. A strong economy is good for the pound. Not only does it attract more foreign investment, but it may encourage the Bank of England to raise interest rates, which will directly strengthen sterling. Otherwise, if economic data is weak, the British pound is likely to fall.
Another important data release for the British Pound is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a certain period. If a country produces highly sought-after exports, its currency will take full advantage of the additional demand generated by foreign buyers seeking to purchase these goods. Therefore, a positive net trade balance strengthens the currency and vice versa for a negative balance.
