GBP/USD Continues Positive Momentum Below 1.3050 on Friday
- The sharp decline in EUR/GBP boosts Pound Sterling
- Risk mood improvements may extend recovery for GBP/USD
GBP/USD maintained its positive stance on Thursday, brushing off the prevailing strength of the US Dollar (USD). The pair continued its upward trajectory on Friday, hovering near the 1.3050 level. With no major data releases in sight, market sentiment could drive GBP/USD’s movements as the week draws to a close.
GBP Price Movement This Week
The recent shift in the EUR/GBP rate has contributed significantly to the strengthening of Pound Sterling against the US Dollar. Following the ECB’s decision to reduce key rates by 25 basis points and President Christine Lagarde’s dovish remarks, EUR/GBP plunged by nearly 0.5% on Thursday.
Moreover, the UK’s Office for National Statistics reported a 0.3% monthly increase in Retail Sales for September, surpassing market expectations of a 0.3% decline. This positive data further bolstered the performance of Pound Sterling.
Additionally, the optimistic trend observed in major Asian equity markets, fueled by encouraging Chinese data, indicates a positive shift in overall market sentiment on Friday. US Stock index futures are also showing gains ranging from 0.1% to 0.4% at the time of writing.
If Wall Street’s leading indices continue their upward trajectory post-market open, the USD may encounter selling pressure during the American session, potentially driving GBP/USD higher.
GBP/USD Technical Analysis
While GBP/USD is currently trading above a descending trend line, the Relative Strength Index (RSI) on the 4-hour chart is trending lower towards 50, indicating a lack of strong bullish momentum.
Key resistance levels include 1.3090-1.3100 (Fibonacci 23.6% retracement, static level), followed by 1.3130 (50-day SMA) and 1.3175 (20-day SMA). On the downside, support levels lie at 1.3000 (static level, round figure), 1.2980 (downtrend endpoint), and 1.2960 (100-day SMA).
Pound Sterling FAQs
What You Need to Know About Pound Sterling
The Pound Sterling (GBP) is the oldest currency globally, originating in 886 AD and serving as the official currency of the United Kingdom. It holds the distinction of being the fourth most traded currency in the foreign exchange market, accounting for 12% of all transactions and averaging $630 billion daily.
Factors Influencing GBP Value
Monetary policy decisions by the Bank of England (BoE) play a pivotal role in determining the value of the Pound Sterling. The BoE aims for price stability, targeting an inflation rate around 2%. Adjustments in interest rates are the primary tool used to achieve this goal. Higher interest rates attract global investors, strengthening GBP, while lower rates can weaken it.
Economic Indicators Impacting GBP
Data releases, such as GDP, Manufacturing and Services PMIs, and employment figures, reflect the health of the UK economy and influence GBP value. A robust economy attracts foreign investment and may prompt the BoE to raise interest rates, bolstering GBP. Conversely, weak economic data can lead to a decline in Pound Sterling.
Trade Balance and GBP
The Trade Balance indicator measures a country’s export earnings versus import expenditures. A positive Trade Balance signals a country’s strong export demand, benefiting its currency. For the Pound Sterling, a positive balance can strengthen its value, while a negative balance may lead to depreciation.