GBP/USD Surges to 10-Week High
- GBP/USD keeps climbing, gaining another quarter of a percent and hitting fresh 10-week highs.
- Despite a quiet news day, currency traders are pushing the Pound against the Dollar towards the 1.2700 mark.
- “No news is good news” seems to be the motto as the UK economy appears stable, and expectations for three more Bank of England rate cuts remain.
GBP/USD continued its upward journey on Wednesday, reaching a new 10-week peak. The pair briefly touched 1.2700 for the first time since mid-December, as optimistic traders bought up Cable. And why the bullish sentiment? Well, it seems like the absence of negative news is giving traders reason to cheer, at least for now.
The Pound Sterling is currently enjoying a breather from major global headlines, both economic and political. It appears the UK is, for the moment, avoiding the spotlight of US President Trump’s trade-related or other concerns. Looking ahead, the Bank of England (BoE) is still broadly expected to implement three more interest rate cuts in 2025, but these potential cuts are already largely factored into market expectations.
GBP/USD price forecast
The recent wave of buying interest in the Pound Sterling has propelled GBP/USD decisively above its 200-day Exponential Moving Average (EMA), currently around 1.2670. This marks the first time buyers have managed to push prices above this crucial moving average since it was breached to the downside in mid-November 2024. To confirm this bullish signal, we need to see a solid daily close above the EMA. However, with momentum clearly building in favor of the bulls, Cable’s impressive 5% rally from its recent swing low around 1.2100 looks set to continue.
GBP/USD daily chart
Pound Sterling FAQs
Did you know the Pound Sterling (GBP) is the world’s oldest currency, dating all the way back to 886 AD? It’s also the official currency of the United Kingdom and a major player in global foreign exchange (FX) markets. In fact, it’s the fourth most traded currency, accounting for about 12% of all FX transactions, which averages a massive $630 billion changing hands every day according to 2022 figures. Some of its most popular trading pairs include GBP/USD, often nicknamed ‘Cable’ (making up 11% of FX trades), GBP/JPY, known among traders as the ‘Dragon’ (3%), and EUR/GBP (2%). The Bank of England (BoE) is the institution responsible for issuing the Pound Sterling.
What really makes the Pound Sterling tick? Well, the most important influence is the monetary policy decided by the Bank of England. The BoE’s main focus is hitting its target of “price stability”, aiming for a steady inflation rate of around 2%. To achieve this, they primarily use interest rates as a tool. If inflation is too high, the BoE will try to bring it down by increasing interest rates. This makes borrowing more expensive for individuals and businesses. Generally, this is good news for the Pound, as higher interest rates make the UK a more attractive place for global investors to invest their funds. On the flip side, if inflation is too low, it’s a sign the economy is slowing down. In this case, the BoE might consider lowering interest rates to make borrowing cheaper, encouraging businesses to borrow more and invest in projects that can boost growth.
Economic data releases are like health checks for the UK economy and can definitely move the Pound Sterling. Key indicators such as GDP (Gross Domestic Product), Manufacturing and Services PMIs (Purchasing Managers’ Indexes), and employment figures can all sway the direction of the GBP. A strong economy is generally positive for the Pound. It not only attracts more investment from overseas but can also prompt the BoE to raise interest rates, directly strengthening the GBP. Conversely, if economic data is weak, the Pound Sterling is likely to weaken.
Another important piece of data to watch for the Pound Sterling is the Trade Balance. This indicator essentially shows the difference between a country’s earnings from exports and its spending on imports over a certain period. If a country produces popular exports that are in high demand, its currency will benefit from the increased demand as foreign buyers need to purchase the currency to buy those goods. So, a positive Trade Balance generally makes a currency stronger, while a negative balance tends to weaken it.
