GBP/USD climbs as US CPI miss fuels Fed rate cut bets
GBP/USD holds above 1.3500 as USD loses strength after CPI
Pound Sterling edges lower against US Dollar ahead of US inflation data
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Sterling still set for weekly gain over 0.80% amid broad Greenback weakness earlier in the week.
US economy added 139K jobs in May, beating forecasts and reinforcing Fed’s cautious stance on rate cuts.
Dollar strength resurfaces, with DXY climbing 0.58% to 99.28, its highest in two days.
GBP/USD tumbled during the North American session, down over 0.30% after the latest jobs report in the United States (US) maintained the status quo, with the economy remaining strong. The pair traded at 1.3526 after hitting a daily high of 1.3586.
Pound retreats below 1.3550 after NFP beats estimates, lifting the US Dollar and dampening dovish expectations
US Nonfarm Payroll figures in May exceeded estimates of 130K, rising by 139K, which was below April’s downwardly revised 147K. Although the jobs market shows that it’s softening, beating economists’ estimates, it pushed aside traders’ bets that the US Federal Reserve (Fed) will cut interest rates in 2025.
The data revealed that the Unemployment Rate remained unchanged at 4.2%, and that the Federal Government cut 10,000 jobs in the past month.
A scarce economic docket in the UK, kept GBP/USD traders leaning onto US news. In addition, Sterling is poised to post gains of over 0.80% in the week, sponsored fy broad UA Dollar weakness.
Despite this, the buck has recovered some ground, as depicted by the US Dollar Index (DXY). The DXY, which tracks the value of the American dollar against a basket of six currencies, climbed 0.58% to 99.28, its highest level in two days.
Next week, the UK economic docket will feature jobs data and gross Domestic Product (GDP) figures for April. Across the pond, the US schedule will announce the latest Consumer Price Index (CPI), followed by the Producer Price Index (PPI) and the University of Michigan Consumer Sentiment.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.32%
-0.40%
0.75%
-0.35%
-0.75%
-0.76%
0.08%
EUR
0.32%
-0.08%
1.07%
-0.03%
-0.43%
-0.46%
0.39%
GBP
0.40%
0.08%
1.22%
0.05%
-0.35%
-0.38%
0.46%
JPY
-0.75%
-1.07%
-1.22%
-1.09%
-1.49%
-1.51%
-0.76%
CAD
0.35%
0.03%
-0.05%
1.09%
-0.40%
-0.43%
0.42%
AUD
0.75%
0.43%
0.35%
1.49%
0.40%
0.02%
0.90%
NZD
0.76%
0.46%
0.38%
1.51%
0.43%
-0.02%
0.85%
CHF
-0.08%
-0.39%
-0.46%
0.76%
-0.42%
-0.90%
-0.85%
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).
GBP/USD Price Forecast: Technical outlook
The trend remains up, as GBP/USD buyers tested the 20-day Simple Moving Average (SMA) at 1.3509. If this level holds, the pair’s direction would likely resume in the short term after making successive series of higher highs and higher lows, warranting further upside.
However, momentum has taken a hit. The Relative Strength Index (RSI) is aiming lower, hints that sellers are moving in.
If GBP/USD stays above 1.3500, this opens the door for a move to 1.3584 today’s high, followed by the year-to-date (YTD) high at 1.3616. On the other hand, a daily close below 1.35 could sponsor a drop towards April’s 28 sing high turned support at 1.3443 ahead of the 1.34 mark.
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.
GBP/USD trades flat on Tuesday, holding within Monday’s range near 1.3520.
BoE Governor Bailey sees rates moving lower but warns of increased uncertainty.
A split within the MPC signals a cautious, data-driven rate path ahead.
The British Pound (GBP) is trading flat against the US Dollar (USD) on Tuesday, edging slightly lower from its intraday high while remaining within Monday’s range. The GBP/USD pair holds steady as the US Dollar eases slightly from a six-week low, with market participants eyeing upcoming US economic data and digesting fresh commentary from Bank of England (BoE) officials following Tuesday’s Monetary Policy Report Hearings.
At the time of writing, the GBP/USD pair is trading around 1.3521 during the late American session, paring some of Monday’s gains amid a lack of clear directional drivers. Meanwhile, the US Dollar Index (DXY) is staging a mild recovery after Monday’s drop to a six-week low, supported by upbeat JOLTS Job Openings data. The index has climbed back above the 99.00 mark, hovering near Monday’s high and last seen trading around 99.23.
Earlier on Tuesday, Bank of England officials appeared before Parliament to offer fresh insight into the central bank’s policy outlook during the Monetary Policy Report Hearings. BoE Governor Andrew Bailey reiterated that interest rates are likely to head lower, but stressed that the path ahead is increasingly uncertain. “I think the path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty,” Bailey noted, citing heightened global trade tensions and their potential to disrupt investment and economic growth.
Deputy Governor Sarah Breeden, a centrist on the Monetary Policy Committee (MPC), told lawmakers that she supported the May rate cut even in the absence of external trade shocks, reinforcing the BoE’s bias toward easing. However, divisions within the MPC remain clear—Swati Dhingra pushed for a deeper cut, warning of the drag from tight policy, while Catherine Mann, an external member of the MPC who opposed the May rate cut, said the labor market appeared to be cooling less than she had anticipated back in February, when she supported a more aggressive half-point reduction.
Overall, the BoE hearings revealed that while interest rates are likely to decrease, there is no clear consensus on how quickly this should occur. Some members are concerned that inflation may persist, while others believe that keeping rates too high for too long could harm the economy. With opinions clearly split, the central bank is likely to take a cautious, data-driven approach in the months ahead.
GBP/USD Weekly Outlook: Pound Sterling’s upside bias persists as traders brace for US NFP week
The Pound Sterling (GBP) set out on a corrective downside against the US Dollar (USD) after the GBP/USD pair hit the highest level since February 2022, just shy of the 1.3600 mark. It was all about the US tariff headlines and the resultant USD price action that emerged as underlying factors behind the GBP/USD performance in the past week.
The Greenback kicked off a solid recovery and maintained it almost throughout the week, barring a brief pullback on Thursday. Optimism on the trade front and hawkish US Federal Reserve’s (Fed) policy stance powered the USD turnaround. It started with a positive shift in risk sentiment after US President Donald Trump’s backpedalled on 50% tariffs announced last Friday on European Union (EU) imports from June 1, extending the deadline to July 9. Read more…
GBP/USD moves back closer to 1.3500 mark amid broadly weaker USD
The GBP/USD pair regains positive traction at the start of a new week amid renewed US Dollar (USD) selling though it remains below the 1.3500 psychological mark during the Asian session. The Personal Consumption Expenditures (PCE) Price Index released on Friday pointed to further easing inflationary pressures in the US and bolstered the case for more policy easing by the Federal Reserve (Fed). Adding to this, concerns about the worsening US fiscal condition, fueled by the passage of US President Donald Trump’s “Big Beautiful Bill,” exert fresh downward pressure on the USD.
The British Pound (GBP), on the other hand, continues with its relative outperformance on the back of expectations that the Bank of England (BoE) would pause at its next meeting on June 18 and take its time before lowering borrowing costs further. This, in turn, is seen as another factor lending support to the GBP/USD pair. However, a weaker risk tone limits USD losses and might cap the pair. Read more…
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
The United Kingdom’s annual CPI rose % in April vs. 3.3% forecast.
British inflation jumped to 1.2% MoM in April vs. a 1.1% anticipated.
GBP/USD regains 1.3450 after UK CPI inflation data.
The United Kingdom (UK) annual headline Consumer Price Index (CPI) jumped by 3.5% in April after recording a 2.6% growth in March, the data released by the Office for National Statistics (ONS) showed on Wednesday.
The market forecast was for a 3.3% acceleration in the reported period. The reading moves further away from the Bank of England’s (BoE) 2% target.
The core CPI (excluding volatile food and energy items) rose 3.8% year-over-year (YoY) in the same period, as against a 3.4% increase in March, beating the expected print of 3.6%.
Services inflation firmed up to 5.4% YoY in April from March’s 4.7%.
Meanwhile, the monthly UK CPI inflation jumped to 1.2% in April from 0.3% in March. Markets predicted a 1.1% reading.
GBP/USD reaction to the UK CPI inflation data
The UK CPI data provides a fresh boost to the Pound Sterling, driving GBP/USD briefly above 1.3450 before reversing to near 1.3432, where it now wavers. The pair is still up 0.32% on the day.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.36%
-0.26%
-0.55%
-0.18%
-0.35%
-0.32%
-0.63%
EUR
0.36%
0.10%
-0.21%
0.16%
0.03%
0.04%
-0.28%
GBP
0.26%
-0.10%
-0.27%
0.09%
-0.05%
-0.05%
-0.39%
JPY
0.55%
0.21%
0.27%
0.34%
0.19%
0.21%
-0.10%
CAD
0.18%
-0.16%
-0.09%
-0.34%
-0.17%
-0.13%
-0.47%
AUD
0.35%
-0.03%
0.05%
-0.19%
0.17%
0.02%
-0.30%
NZD
0.32%
-0.04%
0.05%
-0.21%
0.13%
-0.02%
-0.33%
CHF
0.63%
0.28%
0.39%
0.10%
0.47%
0.30%
0.33%
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).
This section below was published at 02:15 GMT as a preview of the UK Consumer Price Index (CPI) inflation data.
The United Kingdom’s Office for National Statistics will publish the April CPI data on Wednesday.
Inflation, as measured by the CPI, is forecast to be much higher than in March.
The GBP/USD pair trades near its 2025 high and aims to advance beyond it.
The United Kingdom (UK) will release the Consumer Price Index (CPI) data for April on Wednesday at 06:00 GMT. The report, released by the Office for National Statistics (ONS), has a relevant impact on the Sterling Pound (GBP) amid its potential effect on future Bank of England (BoE) monetary policy decisions.
Inflation, as measured by the CPI, is foreseen to have risen by 1.1% on a monthly basis, much higher than the 0.3% posted in March. The annual figure is expected to be 3.3%, also higher than the previous 2.6%. Finally, the annual core CPI is forecast to hit 3.7% after posting 3.4% in the previous month.
What to expect from the next UK inflation report?
The UK CPI is then seen almost doubling the BoE’s goal of 2%. The news, while discouraging, would come as no surprise.
The BoE’s last decision on monetary policy was to cut the benchmark interest rate to 4.25% from 4.5%, with five out of the nine Monetary Policy Committee (MPC) members backing such a decision. Two other voting members aimed for a larger cut, while the other two preferred to keep rates on hold.
In the accompanying statement, policymakers noted, “There is also a lot of uncertainty from global developments, partly because of changes in global trade policies. We are assessing what this could mean for UK inflation closely.” Officials also added: “We expect an increase in inflation this year. It is likely to rise temporarily, to 3.7%, partly because of higher energy prices. Inflation is expected to fall back to the 2% target after that.”
Uncertainty has dominated central banks’ messages since United States (US) President Donald Trump arrived in the White House with his protectionist policies. Massive tariffs pose a risk to global growth and inflation. While the UK is among the economies less affected by Trump’s decision, it is indeed not exempt from suffering an economic setback due to levies.
Markets are cautiously optimistic amid a 90-day pause in levies and a reduction of retaliatory tariffs between Washington and Beijing. Still, it is worth noting tensions remain in the background, with trade negotiations underway without progress being reported.
Deutsche Bank senior economist Sanjay Raja adds: “April inflation will present the biggest test for the Monetary Policy Committee so far this year”.
How will the UK Consumer Price Index report affect GBP/USD?
The inflation uptick falls within the BoE’s predictions, but that does not make it less worrisome. Generally speaking, higher than anticipated CPI figures would suggest the BoE will adopt a more hawkish stance and refrain from trimming interest rates, resulting in a firmer GBP. The opposite scenario is also valid, with softer-than-anticipated inflationary pressures leaving the door open for additional rate reductions.
Ahead of the announcement, the GBP/USD pair comfortably trades above the 1.3300 mark, roughly 100 pips away from the 2025 peak at 1.3445 amid broad US Dollar weakness. The Greenback came under selling pressure after Moody’s Investors Service, a rating agency, downgraded the United States sovereign credit rating from Aaa to Aa1 on Friday, expressing concerns about piling up debt.
Valeria Bednarik, Chief Analyst at FXStreet, expects GBP/USD to reach higher highs for the year in the upcoming days. “Given the broad USD weakness and increasing price pressures in the UK, the GBP/USD pair is likely to resume its advance and challenge the yearly peak.”
Bednarik adds: “From a technical point of view, GBP/USD is in a consolidative stage since mid-April. The daily chart shows that moving averages have turned flat, reflecting the lack of directional strength, yet the pair holds above them all, with the 20 Simple Moving Average (SMA) providing support at around the 1.3300 mark. Below such level, buyers have been defending the downside at around the 1.3250 region, while the base of the monthly range comes at 1.3140.”
Finally, Bednarik states: “A steady advance beyond the 1.3400 mark should favor a run past the year high and towards the 1.3500 area, while additional gains expose the 1.3560 price zone, where GBP/USD peaked in September 2022.”
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
GBP/USD rises as US Dollar weakens in response to Moody’s decision to downgrade the US credit rating by one notch.
A series of weak US economic indicators has strengthened expectations of further Federal Reserve rate cuts later this year.
The Pound Sterling has strengthened, supported by UK GDP data released on Thursday that exceeded expectations.
The GBP/USD pair recovered from prior session losses, trading near the 1.3300 level during Asian session on Monday. The rebound is largely driven by renewed pressure on the US Dollar (USD) after Moody’s Investors Service downgraded the US credit rating by one notch, from Aaa to Aa1. The agency cited escalating debt levels and a growing burden from interest payments as primary concerns.
This move aligns with previous downgrades by Fitch Ratings in 2023 and Standard & Poor’s in 2011. Moody’s now forecasts US federal debt to rise to approximately 134% of GDP by 2035, up from 98% in 2023. The federal deficit is projected to widen to nearly 9% of GDP, fueled by mounting debt-servicing costs, increased entitlement spending, and declining tax revenues.
Further weighing on the Greenback, a series of weak US economic indicators has reinforced expectations of rate cuts by the Federal Reserve later this year. Notably, the University of Michigan’s Consumer Sentiment Index fell sharply to 50.8 in May from 52.2 in April, the lowest level since June 2022 and the fifth consecutive monthly decline. Analysts had forecast a rise to 53.4.
Despite these headwinds, the US Dollar may find some support from easing global trade tensions. A preliminary trade deal between the US and China proposes significant tariff reductions—Washington is set to lower duties on Chinese goods from 145% to 30%, while Beijing will cut tariffs on US imports from 125% to 10%.
Market sentiment is also lifted by renewed optimism over a potential US-Iran nuclear deal and upcoming talks between US President Donald Trump and Russian President Vladimir Putin aimed at de-escalating the Ukraine conflict.
Meanwhile, the Pound Sterling (GBP) has gained momentum, underpinned by stronger-than-expected UK GDP data released on Thursday. Both monthly and quarterly figures showed robust economic growth, bolstering expectations that the Bank of England (BoE) may maintain its current interest rate stance should inflation remain persistent or accelerate further.
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.
GBP/USD contracts into near-term midrange ahead of key UK and US data
GBP/USD slips modestly from weekly high as traders await UK GDP
Pound Sterling outperforms US Dollar as US inflation cools down
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
GBP/USD rallied on Tuesday, bolstered by headlines of an incoming US-UK trade agreement.
Specific details remain limited, but GBP markets were buoyed by hopes to avert US tariffs.
The Pound Sterling settled 0.4% higher against the Greenback after testing 1.3400.
GBP/USD rose on Tuesday, climbing four-tenths of one percent on the day and testing the 1.3400 handle on headlines of a possible US-UK trade deal that would see the UK avoid the brunt of trade tariffs being actively pursued by the Trump administration.
The Federal Reserve’s (Fed) upcoming rate call due on Wednesday still hangs over markets as the key market event of the week. Despite markets broadly anticipating another hold on Fed rates, investors will be taking a close look at policymaker comments, specifically Fed Chair Jerome Powell’s statement, for any signs that the Fed might be pivoting toward a rate-cutting cycle sooner rather than later.
Fed, Boe double header due this week
The Fed has come under pressure on multiple fronts to drop interest rates recently: market participants are always on the hunt for cheaper financing options, and the Trump administration has been incredibly vocal and adamant that the Fed’s job should be to lower interest rates in order to make US debt servicing cheaper. This runs largely opposite the Fed’s dual mandates of supporting full employment and keeping price volatility in check, however these key aspects of the Fed’s mandate are largely lost on US President Donald Trump.
The Bank of England (BoE) will be following up Wednesday’s Fed action with its own rate call on Thursday. Unlike the Fed, the BoE is broadly expected to deliver another quarter-point rate trim, with the BoE’s Monetary Policy Committee (MPC) expected to vote nine-to-one in favor of delivering its fourth rate cut since August of last year.
GBP/USD price forecast
Despite a firm bullish performance on Tuesday, GBP/USD remains embroiled in a near-term consolidation range baked in between 1.3450 and 1.3250. Price action is leaning into the midrange, with technical oscillators showing momentum has largely drained out of Cable markets.
GBP/USD is still well supported far above the 200-day Exponential Moving Average (EMA) near 1.2830, however further topside momentum will take a strong showing from bidders that have remained trapped below the 1.3400 handle for the time being.
GBP/USD daily chart
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.
GBP/USD slips below 1.34 as risk rally fades, US data disappoints
The Pound Sterling depreciates against the US Dollar and falls after testing the year-to-date (YTD) high of 1.3443. However, it fails to remain above 1.34 as it extends its losses. At the time of writing, the GBP/USD trades at 1.3379, down 0.29%. Read More…
Pound Sterling corrects against USD, US Job Openings data misses estimates
GBP/USD declines below 1.3450 ahead of BoE’s Ramsden speech
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
GBP/USD weakens to around 1.3425 in Tuesday’s early Asian session.
Improved optimism over trade tension supports the US dollar and creates a headwind for the pair.
Traders brace for the BoE’s Dave Ramsden speech later on Tuesday.
The GBP/USD pair attracts some sellers to near 1.3425 during the early Asian trading hours on Tuesday, pressured by a modest rebound of US Dollar (USD). Investors await a speech by Bank of England (BoE) official Dave Ramsden for fresh impetus.
The Greenback strengthens against the Pound Sterling (GBP) as the fears of trade tensions ease. China exempted some US imports from its 125% tariffs on Friday, raising hopes that the trade war between the US and China is nearing an end, although China quickly knocked down US President Donald Trump’s assertion that trade talks between the two countries were underway.
US Agriculture Secretary Brooke Rollins said on Sunday that the Trump administration is having daily conversations with China over tariffs. Rollins further stated that there were ongoing talks between the two nations and that trade deals with other nations were “very close.”
On the GBP’s front, firm expectations that the BoE will cut interest rates by 25 basis points (bps) to 4.25% in the May meeting continue to weigh on the GBP. Investors will be closely watching a speech by Bank of England (BoE) official Dave Ramsden later on Tuesday. Any dovish comments could weaken the Cable in the near term.
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.
GBP/USD slips despite strong UK Retail Sales as USD dominance prevails
Pound Sterling gains on surprisingly positive UK Retail Sales data
UK Retail Sales jump 0.4% MoM in March vs. -0.4% expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
GBP/USD rebounds past 1.3300 as US-China tensions rattle US Dollar
Pound Sterling recovers against US Dollar despite hopes on US-China trade deal
GBP/USD Price Forecast: Bullish outlook remains in play above 1.3250
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
GBP/USD is pressured by upbeat US PMIs and growing confidence in the US Dollar amid trade de-escalation signals.
Trump eases market jitters by confirming no intention to fire Powell, lifting risk appetite and USD.
The Pound Sterling holds above key support at 1.3250; a break below could open the door to test 1.3152 (50-day SMA).
The Pound Sterling (GBP) depreciates against the Greenback on Wednesday, yet slightly recovered after diving to four-day lows of 1.3230. Traders seemed relieved that US President Donald Trump, although angry with Federal Reserve (Fed) Chair Powell, is not looking to sack him. At the time of writing, GBP/USD trades were at 1.3289, down 0.28%.
GBP/USD dips to 4-day low before trimming losses after Trump signals Fed Chair Powell stays and China tariff cuts loom
Investors’ sentiment improved after the North American trading session ended on Tuesday and Trump said that he is not looking to fire Powell. This boosted global equities and drove the US Dollar higher.
GBP/USD bounced recently on news that the White House is considering slashing tariffs on China to de-escalate the trade war, according to the Wall Street Journal. Although traders cheered this move, the pair remains pressured by renewed confidence in the American currency.
On the data front, US Flash PMIs revealed by S&P showed that manufacturing activity in April was improving, contrary to services, which continued to slow down. The Manufacturing PMI rose from 50.2 to 50.7, exceeding estimates of 49.4, while the Services PMI dipped from 54.4 to 51.4.
Across the pond, the S&P Global Manufacturing PMI in April contracted for six straight months. It was 44, as expected, down from 44.9 in the prior month. The services index deteriorated from March’s seven-month high of 52.5 to 48.9, missing forecasts of 51.3.
GBP/USD Price Forecast: Technical outlook
Amid this backdrop, GBP/USD uptrend remains after dipping below 1.3300. However, sellers seem to have gathered momentum as the Relative Strength Index (RSI) aims towards a neutral level. Still, they must achieve a daily close below 1.3250 so they can test the next key support at 1.3152, the 50-day Simple Moving Average (SMA).
On the other hand, if GBP/USD climbs past 1.3300, buyers could target the year-to-date (YTD) peak of 1.3423 hit on April 22.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Swiss Franc.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.24%
0.02%
0.36%
0.06%
-0.51%
-1.03%
1.01%
EUR
-0.24%
-0.36%
0.05%
-0.21%
-0.92%
-1.30%
0.75%
GBP
-0.02%
0.36%
0.61%
0.16%
-0.57%
-0.93%
1.12%
JPY
-0.36%
-0.05%
-0.61%
-0.29%
-0.96%
-1.23%
0.69%
CAD
-0.06%
0.21%
-0.16%
0.29%
-0.68%
-1.09%
0.97%
AUD
0.51%
0.92%
0.57%
0.96%
0.68%
-0.35%
1.67%
NZD
1.03%
1.30%
0.93%
1.23%
1.09%
0.35%
2.10%
CHF
-1.01%
-0.75%
-1.12%
-0.69%
-0.97%
-1.67%
-2.10%
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).
GBP/USD soars above 1.3400 as threat to Fed’s independence batters US Dollar
The GBP/USD pair rallies to near 1.3400 during European trading hours on Monday, the highest level seen in seven months. The Cable strengthens as the US Dollar (USD) has been battered by the threat to the Federal Reserve’s (Fed) independence after United States (US) President Donald Trump.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down over 1% to a fresh three-year low near 98.00. Read more…
GBP/USD Forecast: Pound Sterling could face next resistance at 1.3430
GBP/USD extends its uptrend to start the week and trades at its highest level since September near 1.3400. The pair could face stiff resistance at 1.3430.
Following the long weekend, the US Dollar (USD) comes under a strong selling pressure on Monday as the US-China trade conflict shows no signs of de-escalation anytime soon. Read more…
GBP/USD Elliott Wave technical analysis [Video]
The GBPUSD daily chart displays a clear trending pattern using the Elliott Wave theory. Currently, the currency pair is moving within navy blue wave 1, part of the broader gray wave 1. This positioning indicates the beginning of a new impulse wave, which could gain momentum in upcoming sessions. The structure suggests this is the first wave in what might develop into a complete five-wave impulse pattern across current and higher timeframes. Read more…
GBP/USD attracts some buyers to around 1.3350 in Monday’s early Asian session.
The UK hopes to strike a deal with Trump after he imposed 10% tariffs on most imports of British goods to the US.
Fed’s Powell said the US central bank remains in wait-and-see mode.
The GBP/USD pair extends its upside to near 1.3350 during the early Asian session on Monday. The uptick of the major pair is bolstered by the softer US Dollar (USD) broadly as traders become increasingly confident that the economic policies of US President Donald Trump will lead the economy to a recession.
UK Prime Minister Keir Starmer and US President Donald Trump discussed “ongoing and productive” trade talks in their first call since Trump imposed tariffs on UK goods. According to a Downing Street official, Starmer emphasized his commitment to “free and open trade and the importance of protecting the national interest.”
Starmer is seeking to reach an agreement with the US after Trump announced 10% tariffs on UK goods and a 25% rate on imports of automobiles, steel, and aluminum. Meanwhile, the optimism surrounding the US-UK trade talks continues to underpin the GBP against the Greenback in the near term.
Nonetheless, the hawkish remarks from the US Federal Reserve (Fed) could lift the USD and cap the upside for the major pair. Fed Chair Jerome Powell said last week that escalating tariffs could fuel inflation while undermining growth, complicating the path for interest rate decisions. Powell noted, “For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance.”
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.
The Pound Sterling outperforms most of its peers on upbeat UK employment data for three months ending February.
Investors await the UK CPI data for March, which will be released on Wednesday.
US President Trump will likely announce a temporary suspension of automobile tariffs.
The Pound Sterling (GBP) advances against its major peers, except antipodeans, on Tuesday after the release of the United Kingdom (UK) labor market data for three months ending February. The Office for National Statistics (ONS) reported that the economy added 206K fresh workers, significantly higher than the 144K recorded in three months ending January.
The agency reported that the ILO Unemployment Rate came in line with estimates and the prior release of 4.4%. The scenario of upbeat employment data is favorable for the British currency. However, financial market participants expect that employers could slow down their hiring process in the face of an increase in contributions to social security schemes starting in April.
In the Autumn budget, UK Chancellor of the Exchequer Rache Reeves raised employers’ contribution to National Insurance (NI) from 13.8% to 15%.
Meanwhile, Average Earnings Excluding Bonuses, a key measure of wage growth, grew at a slightly slower pace of 5.9% compared to estimates of 6%. In three months ending January, the wage growth measure rose by 5.8%, downwardly revised from 5.9%. Average Earnings Including Bonuses rose steadily by 5.6% but slower than the expectations of 5.7%.
Mixed Average Earnings data is unlikely to change market expectations for the Bank of England’s (BoE) monetary policy outlook significantly, which indicates that the central bank would cut interest rates in the May policy meeting.
For fresh cues on the interest rate outlook, investors will focus on the UK Consumer Price Index (CPI) data for March, which will be released on Wednesday. Economists expect the UK core CPI – which excludes volatile food and energy prices – to have grown at a steady pace of 3.5%.
Daily digest market movers: Pound Sterling refreshes six-month high against US Dollar
The Pound Sterling posts a fresh six-month high near 1.3250 during North American trading hours on Tuesday. The GBP/USD pair trades firmly as the US Dollar remains under pressure, with investors losing confidence in its structural attractiveness due to back-and-forth decisions on trade policies by United States (US) President Donald Trump.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades cautiously slightly above the three-year low of 99.00.
The ever-shifting tariff headlines from US President Trump, from the 90-day pause on reciprocal tariffs on all of its trading partners, except China, to signals of temporary suspension on additional levies on imported vehicles, have forced traders to reassess the safe-haven appeal of the US Dollar.
On Monday, Donald Trump signaled that he is exploring temporary exemptions for tariffs on imported vehicles and related parts as domestic Original Equipment Manufacturers (OEMs) need more time to set up manufacturing facilities at home. “I’m looking at something to help car companies with it,” Trump said and added, “They’re switching to parts that were made in Canada, Mexico and other places, and they need a little bit of time, because they’re going to make them here,” Bloomberg reported.
Meanwhile, economic risks prompted by Trump’s policies have stemmed the need for interest rate cuts from the Federal Reserve (Fed). On Monday, Fed Governor Christopher Waller backed monetary policy easing in the scenario of an economic recession despite inflationary pressures remaining escalated. “I expect the risk of recession would outweigh the risk of escalating inflation, especially if the effects of tariffs in raising inflation are expected to be short-lived,” Waller said.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Swiss Franc.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.33%
-0.26%
0.01%
0.00%
-0.88%
-1.05%
0.39%
EUR
-0.33%
-0.58%
-0.37%
-0.31%
-1.13%
-1.36%
0.08%
GBP
0.26%
0.58%
0.23%
0.27%
-0.55%
-0.79%
0.66%
JPY
-0.01%
0.37%
-0.23%
0.05%
-0.81%
-1.14%
0.42%
CAD
-0.01%
0.31%
-0.27%
-0.05%
-0.86%
-1.06%
0.39%
AUD
0.88%
1.13%
0.55%
0.81%
0.86%
-0.24%
1.23%
NZD
1.05%
1.36%
0.79%
1.14%
1.06%
0.24%
1.46%
CHF
-0.39%
-0.08%
-0.66%
-0.42%
-0.39%
-1.23%
-1.46%
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).
Technical Analysis: Pound Sterling jumps to near 1.3250
The Pound Sterling extends its winning streak for the sixth trading day and jumps above 1.3200 against the US Dollar (USD) at the time of writing on Tuesday. The near-term outlook of the pair is upbeat as all short-to-long Exponential Moving Averages (EMAs) are sloping higher below the current price.
The 14-day Relative Strength Index (RSI) demonstrates a V-shape recovery from 40.00 to 65.00, suggesting a strong bullish momentum.
Looking down, the 61.8% Fibonacci retracement plotted from late September high to mid-January low, near 1.2927, will act as a key support zone for the pair. On the upside, the three-year high of 1.3430 will act as a key resistance zone.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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