GBP/USD Continues to Reach Fresh 30-Month Highs
The GBP/USD pair saw an uptrend on Thursday, hitting a new 30-month high. This rise was fueled by a widespread sell-off in the US Dollar, leading to increased risk appetite in the Cable market and strengthening the Pound Sterling. The recent 50 basis points cut by the Federal Reserve (Fed) played a significant role in boosting global markets into a risk-on sentiment, while the Bank of England (BoE) decision to maintain interest rates did not provide additional support to the GBP.
BoE Holds Rates Despite Previous Cut, UK Retail Sales Awaited
The Bank of England opted to keep interest rates unchanged at 5.0% on Thursday, with the Monetary Policy Committee voting seven-to-one in favor of this decision. Following a quarter-point cut earlier in the summer, the BoE refrained from further rate adjustments to assess the evolving UK economic landscape. Investors are now awaiting the release of UK Retail Sales data for August, with expectations of a slight decrease in the month-over-month figure.
Key Data Points
- US Initial Jobless Claims decreased to 219K for the week ended September 13, below market forecasts.
- The Philadelphia Fed Manufacturing Survey for September surpassed expectations, indicating an improvement in manufacturing conditions.
Fed’s Bold Move and Market Response
Fed Chair Jerome Powell’s announcement of a 50 basis points rate cut was perceived as a proactive measure to support the US labor market rather than a reactionary response to economic challenges. This bold move was well-received by investors, leading to a surge in risk asset investments and a decline in the safe-haven status of the US Dollar.
Economic Indicator: Retail Sales (MoM)
The Retail Sales data, released monthly by the Office for National Statistics, tracks the volume of goods sold by retailers in Great Britain to end customers. Changes in Retail Sales serve as a key indicator of consumer spending trends. A higher reading typically boosts the Pound Sterling, while a lower reading has a bearish impact.
GBP/USD Price Forecast
Despite reaching a 30-month high and breaching the 1.3300 level, GBP/USD struggled to maintain bullish momentum, hovering near the psychological barrier. The pair remains above the 50-day Exponential Moving Average (EMA), indicating a bullish trend in the daily candlesticks.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency globally and the official currency of the United Kingdom. It is the fourth most traded currency in foreign exchange markets, with key trading pairs including GBP/USD, GBP/JPY, and EUR/GBP. The value of GBP is influenced by monetary policy decisions by the Bank of England, economic indicators, and trade balance data.
Key Factors Influencing Pound Sterling Value:
- Monetary policy decisions by the Bank of England, primarily focused on maintaining price stability.
- Economic indicators such as GDP, PMIs, and employment data that reflect the health of the UK economy.
- Trade balance data, indicating the difference between exports and imports, impacting currency strength.