- GBP/USD rose above 1.3350 on Wednesday as the pressure on the US dollar eased.
- The Bank of England is expected to announce its latest interest rate decisions soon, with a quarter-point cut widely anticipated.
- Upcoming tariff deadlines are set for August 8th, which is soon approaching.
The GBP/USD pair experienced a significant boost on Wednesday, rebounding from a low of about 1.3140, which marked a 15-week low. It eventually climbed above 1.3350, likely due to upward momentum on the charts. The Bank of England (BOE) is meeting on Thursday, reportedly ready to implement a 25 basis point interest rate cut.
The currency pair has shown strong bullish tendencies, rising in three of the last four trading days. It saw technical rebounds from the 200-day exponential moving average at approximately 1.3175 and gained nearly 1.75%. With support around the 1.3200 level, it’s evident that GBP/USD bulls are trying to push the pair back to previous highs near the 1.3600 area.
The BOE is likely to go through with a rate cut on Thursday, with market expectations suggesting a 7-3 vote in favor of lowering the main reference rate from 4.25% to 4.0%. If the BOE aligns its moves with market forecasts, this will mark the seventh interest rate cut since it initiated its lowering policy in July 2024.
GBP/USD Daily Chart
Pound Sterling FAQ
Pound Sterling (GBP) is recognized as the oldest currency still in use today (with origins in 886 AD) and serves as the official currency of Britain. According to 2022 data, GBP is the fourth most traded currency worldwide, responsible for about 12% of all forex transactions, translating to an average of $630 billion daily. Its main trading pair is GBP/USD, also known as “cable,” alongside GBP/JPY (known as “dragon”) and EUR/GBP.
The value of the pound is primarily influenced by monetary policy set by the Bank of England. The BOE focuses on achieving “price stability,” targeting a stable inflation rate around 2%. Adjusting interest rates is the main approach to reaching this goal. High inflation typically leads the BOE to increase rates, which can make GBP more attractive to investors. Conversely, low inflation might prompt the BOE to cut rates to encourage borrowing and investments.
Economic data plays a crucial role in assessing the health of the economy and can impact the pound’s value. Key indicators, such as GDP, manufacturing and services PMI, and employment figures, can sway GBP’s direction. A robust economy typically strengthens the pound, attracting foreign investment and potentially leading to higher interest rates.
One significant indicator for the pound is the trade balance, which reflects the difference between a country’s exports and imports over a defined period. A strong export performance benefits the currency by increasing demand from foreign buyers. Thus, a positive trade balance generally boosts currency value.
