GBP/USD Price Forecast: Holds gains near 1.3100, but bearish momentum persists below 100-day EMA
- GBP/USD edges higher to near 1.3090 in Friday’s early European session.
- The pair keeps the bearish vibe in the daily chart, capping below the key 100-day EMA.
- RSI stands below the midline near 39, confirming weak momentum in the near term.
The GBP/USD pair strengthens to around 1.3090 during the early European session on Friday. Nonetheless, the potential upside for the major pair might be limited amid growing expectations of the Bank of England (BoE) rate cut at its next monetary policy meeting in December. Traders brace for the UK Retail Sales data later on Friday, along with the flash UK S&P Global PMI Purchasing Managers Index (PMI).
Recent weak UK economic data, such as Consumer Price Index (CPI) inflation, disappointing GDP, and Industrial Production readings, have boosted a BoE rate cut bets in the December meeting. The UK central bank is expected to cut interest rates in December and again early next year as inflation cools over the coming months, according to a majority of economists in a Reuters poll who last month expected borrowing costs to remain unchanged for the remainder of this year.
Technical Analysis:
In the daily chart, GBP/USD trades at 1.3091. The descending 100-day EMA at 1.3323 continues to cap rebounds and preserves a broader bearish bias. Price action remains settled below this average, keeping the focus on the downside. RSI at 39 stays below the 50 midline, confirming weak momentum without oversold stress. A daily close back above the EMA would ease pressure.
Bollinger Bands contract, with price holding beneath the 20-period midline at 1.3148, signaling reduced volatility. The narrowing envelope indicates a coiling phase. A close above the midline could open a run toward the upper band at 1.3290, while failure to reclaim it would leave the lower band at 1.3005 exposed. The near-term tone stays heavy unless buyers retake the mid-band.
(The technical analysis of this story was written with the help of an AI tool)
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.