- GBP/USD returned a fifth of a percentage point on Wednesday.
- It is a short schedule on the data agenda for Thursday.
- Investors are awaiting Friday’s PMI doubleheader from both the UK and US.
GBP/USD weakened on Wednesday, retreating by around a fifth of a percentage point as markets await a decisive trigger that will tip risk appetite in one direction or another. Markets are hunkering down during a slow midweek gap between key data releases, and the Purchasing Managers’ Index (PMI) numbers are the light at the end of this week’s tunnel.
With Thursday scheduled to be a low-level release day, Cable traders will focus on Friday’s S&P Global PMI numbers on both sides of the Atlantic. UK and US PMI business activity survey results for January are expected to be mixed this week, with services components expected to decline and manufacturing recovering, albeit slightly. PMI numbers generally have limited impact unless results are wildly out of sync with forecasts, but survey response rates tend to be low, and the overall numbers should be taken with a grain of salt.
GBP/USD Price Forecast
GBP/USD has been making a slow and steady recovery after falling to 15-month lows near 1.2100 recently, but the bulls are struggling to push bids beyond the 1.2400 area. The price action has marked a firm technical support level near the 1.2200 region, but a descending 50-day EMA near 1.2500 is making it difficult for any bullish move to develop long legs.
GBP/USD Daily Chart
British Pound FAQs
The British Pound (GBP) is the oldest currency in the world (AD 886) and the official currency of the United Kingdom. It is the fourth most traded foreign exchange (FX) unit 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, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The British Pound is issued by the Bank of England (BoE).
The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it has achieved its main objective of “price stability” – a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for sterling, as higher interest rates make the UK a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing. In this scenario, the Bank of England will consider lowering interest rates to make credit cheaper, so that companies will take on more debt to invest in projects that generate growth.
The data released measures the health of the economy and may affect the value of the pound. Indicators such as GDP, manufacturing and services PMIs and employment can influence the direction of the Pound.
Another important data that is published and affects the British Pound is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly in-demand export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to purchase those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.