GBP/USD Hits Multi-Year High as Greenback Weakness Prevails
- GBP/USD hits 31-month high at 1.3434
- Risk appetite increases on positive US economic figures
- Fed rate cut not solely in response to recession concerns
GBP/USD soared to another multi-year high on Thursday, reaching 1.3434, as the US Dollar weakened across the board, driving Cable to new heights. The surge in risk appetite was fueled by better-than-expected US economic data, alleviating worries about a potential economic downturn.
Despite initial concerns arising from the Federal Reserve’s recent 50 bps rate cut, Fed Chair Jerome Powell clarified that the move was precautionary rather than reactive to impending recession indicators. The latest US economic indicators, including Durable Goods Orders and Initial Jobless Claims, supported Powell’s stance.
US Durable Goods Orders for August met expectations with a flat 0.0% MoM reading, surpassing the forecasted contraction of 2.6%. Similarly, Initial Jobless Claims for the week ended September 20 came in at 218K, lower than the anticipated 225K, indicating a stable labor market.
GBP/USD Price Forecast
As GBP/USD continues its upward trend, technical resistance remains minimal for Pound bulls. However, the one-sided momentum could lead to a potential downside correction, with a possible retreat below the 1.3100 level towards the 50-day Exponential Moving Average at 1.3076.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency globally, dating back to 886 AD, and serves as the official currency of the United Kingdom. Key trading pairs involving GBP include GBP/USD (‘Cable’), GBP/JPY (‘Dragon’), and EUR/GBP. The Bank of England plays a crucial role in determining GBP’s value through monetary policy decisions.
- Monetary Policy Impact: BoE adjusts interest rates to maintain price stability and influence economic growth.
- Economic Data Influence: Indicators like GDP, PMIs, and employment data impact GBP value based on economic health.
- Trade Balance Significance: Positive trade balance strengthens GBP, indicating higher demand for exports.
Overall, understanding Pound Sterling’s value drivers and economic indicators is essential for interpreting its performance in the global financial market.