GBP/USD Enters Consolidation Phase After Positive Close

  • Technical Buyers Remain Interested Above 1.2970
  • US Economic Calendar to Feature Durable Goods Orders Data

After a sharp decline on Wednesday, GBP/USD reversed its direction and closed more than 0.4% higher on Thursday. The pair is currently trading in a tight channel below 1.3000 in the European morning on Friday.

US Dollar Weakens Amid Positive Shift in Risk Sentiment

The US Dollar (USD) outperformed earlier in the week but lost strength on Thursday, with the US Dollar Index dropping by 0.4%. This decline was influenced by a positive shift in risk sentiment and lower US Treasury bond yields, putting pressure on the currency.

US Economic Data to Watch

Friday’s US economic calendar will feature Durable Goods Orders for September and the University of Michigan’s Consumer Sentiment Index for October. While the UoM data revision may not trigger a significant reaction, unexpected rises in Durable Goods Orders could support the USD. Conversely, weaker-than-expected data could lead to USD weakness and push GBP/USD higher.

In addition, US stock index futures are showing a slight rise, which could attract risk-on flows and further weaken the USD later in the day.

GBP/USD Technical Analysis

GBP/USD Technical Analysis

GBP/USD is trading within the upper half of a descending regression channel but is holding above the 100-day Simple Moving Average (SMA) at 1.2970. The Relative Strength Index (RSI) indicator on the 4-hour chart is slightly above 50, indicating seller hesitancy.

If GBP/USD continues to find support at 1.2970, buyers could remain interested. Immediate resistance levels include 1.3000-1.3010 (static level, upper limit of the descending channel), 1.3050 (100-period SMA), and 1.3100 (static level). On the downside, support levels are at 1.2900 (mid-point of the descending channel) and 1.2800 (lower limit of the descending channel).

Pound Sterling FAQs

Key Facts About Pound Sterling (GBP)

The Pound Sterling (GBP) is the oldest currency in the world, dating back to 886 AD, and is the official currency of the United Kingdom. It is the fourth most traded currency globally, with key trading pairs like GBP/USD (Cable), GBP/JPY (Dragon), and EUR/GBP. The Bank of England (BoE) issues the Pound Sterling, and it accounts for 12% of all FX transactions.

Factors Influencing Pound Sterling Value

Monetary policy decisions by the Bank of England are crucial in determining Pound Sterling’s value. The BoE adjusts interest rates to achieve price stability and control inflation around 2%. Strong economic data, like GDP, PMIs, and employment figures, can also impact GBP value positively. Additionally, the Trade Balance indicator reflects a country’s export-import balance, influencing currency strength.

Analysis and Conclusion

The GBP/USD currency pair’s consolidation phase and technical analysis suggest potential movements based on key resistance and support levels. The US economic data releases and market sentiment towards the USD will impact GBP/USD trading dynamics. Understanding the factors influencing Pound Sterling value is essential for investors and traders to make informed decisions in the forex market.

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