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- The GBP/USD pair rose on Monday amid a weak economic calendar at the start of the week.
- UK GDP data is due at the end of the week, and there will be mid-level releases on offer until then.
- The Fed news cycle dominates market attention as policymakers warn of restraint.
The GBP/USD pair has seen some upside Schedule On Monday, rising from recent swing lows to 1.2650 as markets begin the new trading week with willingness to take risks Firmly on the front foot. key Economic data It remains limited during most days of the week, with… cable Traders are set to look forward to high-impact calendar releases that will not arrive until later. US and UK GDP updates are due in the back half of the trading week, with US PCE inflation numbers released on Friday.
Daly Fed: Inflation is not the only risk, but the latest inflation readings are more encouraging
Goolsby of the Federal Reserve: Slowing inflation data would open the door to easier policy
The timeline for Tuesday’s release is quite average, leaving markets jittery based on comments from central bank policymakers. Some comments from Fedspeak caused a little jitter in the markets on Monday, and more of the same is expected on Tuesday.
Federal Reserve Bank San Francisco President Mary Daly noted Monday that inflation printouts for 2024 did not inspire much confidence when viewed overall, although recent printouts have shown promise. Fed policymaker Daly’s comments followed earlier comments from Chicago Fed President Austan Goolsbee, who remains optimistic that more progress on inflation will be forthcoming, noting that the Fed’s policy stance remains appropriately restrained.
Technical forecast for GBP/USD
The rise in sterling on Monday pushed the pair up six-tenths of one percent from bottom to top from last Friday’s low of 1.2622. Hourly candles are tipped with technical resistance at the 200 hourly Exponential Moving Average (EMA) at 1.2695, which could serve as a bump in the road for bullish momentum.
Daily candlesticks are moving into the neutral zone north of the 200-day EMA at 1.2603, and there could be further decline with intraday quotes stalling on the 50-day EMA at 1.2673.
GBP/USD hourly chart
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 sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it has achieved its primary objective of “price stability” – a stable inflation rate of around 2%. The 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, making 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 to a very low level, it is a sign that economic growth is slowing. In this scenario, the Bank of England would consider lowering interest rates to reduce the cost of credit so that companies 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.
