GBP/USD Reaches 30-Month High
The GBP/USD pair surged to another 30-month high on Monday, gaining momentum amidst weakness in the Greenback. This rise comes as the Federal Reserve’s recent double rate cut has put pressure on the USD, allowing the GBP to strengthen further.
- Market Outlook:
As we look ahead, the UK side has little data of note, while the US economic calendar shows a mid-tier lineup. Investors will be watching for comments from Fed Governor Michelle Bowman during the US market session.
- UK Economic Shift:
UK Prime Minister Keir Starmer has hinted at potential economic reforms, acknowledging the need for change as UK inflation remains high compared to other countries. This could signal a shift in economic conditions for the UK.
- US Manufacturing and Services:
September saw a decline in the S&P US Manufacturing PMI, hitting its lowest level since July 2023. In contrast, the S&P US Services PMI eased slightly, beating expectations but pointing to a mixed outlook for the US economy.
- Fed’s Position:
Chicago Fed President Austan Goolsbee suggested that further rate adjustments may be necessary to support business lending conditions amid a tight labor market in the US.
GBP/USD Price Forecast
Despite hitting a fresh high, the GBP/USD pair faces resistance in pushing higher. With prices hovering around the 50-day Exponential Moving Average (EMA) near 1.3000, the trend remains bullish.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency globally, with the GBP/USD pair being one of the most traded in the world. Key factors influencing the value of the Pound Sterling include monetary policy decisions by the Bank of England, economic indicators, and trade balance data.
Monetary Policy Impact:
The Bank of England’s decisions on interest rates play a crucial role in determining the value of the Pound Sterling. Higher interest rates attract global investors, strengthening the GBP, while lower rates can stimulate economic growth but may weaken the currency.
Economic Indicators:
Data releases on GDP, PMIs, and employment can impact the GBP. A strong economy boosts the Pound Sterling, attracting investment and potentially leading to rate hikes. Conversely, weak economic data can weaken the currency.
Trade Balance:
The Trade Balance reflects a country’s exports and imports, influencing currency strength. Positive trade balances indicate robust exports, boosting currency value, while negative balances can weaken the currency.