GBP/USD climbs to fresh 10-week highs on Wednesday
- GBP/USD climbs another quarter of a percent to reach new 10-week highs.
- Cable traders are pushing the pair into 1.2700 despite thin headlines.
- No news is good news as the UK looks set to continue coasting, BoE set for three more rate cuts.
GBP/USD coasted into a fresh 10-week high on Wednesday, clipping the 1.2700 handle for the first time since mid-December as hopeful bulls bid Cable higher for no other reason than there doesn't seem to be any bad news on the horizon, at least for now.
The Pound Sterling is enjoying a nice reprieve from any geopolitical or economic headlines: the UK looks set to continue missing the majority of US President Donald Trump's ire on trade or other factors, at least for the time being. The Bank of England's (BoE) current rate trajectory is still pointing at three more rate cuts in 2025, but further rate cuts from the BoE are fully priced in.
GBP/USD price forecast
Wednesday's bullish push behind the Pound Sterling has bolstered GBP/USD above the 200-day Exponential Moving Average (EMA) at 1.2670, marking the first time bids have traded north of the key moving average since tumbling south of it in the middle of November 2024. Price action still needs to secure a close before the technical signal could imply further room to the upside, but momenutm is firmly cooking to give the edsge to bulls as Cable extends its 5% climb from the last major swing low into 1.2100.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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