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GBP/USD stays below 1.2650 after posting small losses on Monday.
Dovish BoE commentary makes it difficult for Pound Sterling to gather strength.
The pair could extend its correction if it breaks below 1.2600.
GBP/USD turned south after advancing to a multi-month high at the weekly opening and closed marginally lower on Monday. The pair stays relatively quiet below 1.2650, while the technical outlook points to a loss of bullish momentum.
British Pound PRICE Last 7 days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Canadian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.13%
0.05%
-1.29%
0.53%
0.35%
0.24%
-0.48%
EUR
-0.13%
-0.09%
-1.42%
0.40%
0.22%
0.11%
-0.61%
GBP
-0.05%
0.09%
-1.32%
0.49%
0.31%
0.19%
-0.53%
JPY
1.29%
1.42%
1.32%
1.85%
1.66%
1.54%
0.81%
CAD
-0.53%
-0.40%
-0.49%
-1.85%
-0.19%
-0.29%
-1.01%
AUD
-0.35%
-0.22%
-0.31%
-1.66%
0.19%
-0.11%
-0.82%
NZD
-0.24%
-0.11%
-0.19%
-1.54%
0.29%
0.11%
-0.71%
CHF
0.48%
0.61%
0.53%
-0.81%
1.01%
0.82%
0.71%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The upbeat market mood made it difficult for the US Dollar (USD) to find demand early Monday and helped GBP/USD push higher. In the second half of the day, the negative shift seen in risk sentiment supported the USD and weighed on the pair.
Meanwhile, Bank of England (BoE) Monetary Policy Committee (MPC) external member Swati Dhingra, who voted in favor of a 50 basis points (bps) rate cut at the February meeting, said on Monday that the monetary policy restrictiveness is still at a high level. “If you can cut rates by 25 bps at a quarterly pace, you’ll still be in restrictive territory all this year,” she added.
On Tuesday, the US economic calendar will feature regional manufacturing surveys and the Conference Board’s (CB) Consumer Confidence Index data for February. Additionally, US President Donald Trump is expected to sign executive orders later in the American session.
In case safe-haven flows dominate the action in the financial markets later in the day, the USD could hold its ground and cause GBP/USD to extend its correction. As of writing, US stock index futures were trading mixed, pointing to a cautious stance.
GBP/USD Technical Analysis
GBP/USD faces interim support at 1.2600 (static level, round level). If the pair drops below this level and confirms it as resistance, additional losses toward 1.2530 (100-period Simple Moving Average (SMA) on the 4-hour chart, Fibonacci 61.8% retracement of the latest downtrend) and 1.2500 (round level, static level) could be seen.
On the upside, resistances are located at 1.2650 (Fibonacci 78.6% retracement, 100-day SMA), 1.2700-1.2710 (round level, static level) and 1.2750 (static level).
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.
USD/JPY price analysis shows a dismal scenario, leading prices below 149.50.
Declining US yields add strength to the selling pressure.
Upbeat Japanese data and uncertain markets boost the yen.
The USD/JPY price analysis reveals a vulnerable setup, retreating to the 149.50 region on Tuesday as the greenback stays weak while the yen soars on potential rate hike speculations. Sellers are gathering energy to break the 149.0 level.
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The US10Y dipped to 4.375%, which could further boost the yen and weigh on the USD/JPY pair. On the other hand, Japanese yields have also eased on BoJ Governor Ueda’s comments that the bank will intervene if yields spike. While JGB yields are off the highs, markets anticipate BoJ’s further tightening.
On the data front, Japan’s Services PPI figures went to 3.1% y/y in January. Hence, rising wages could strengthen the odds of another BoJ hike. Tokyo inflation also soared to a 21-month top, reinforcing the monetary tightening. According to Bloomberg estimates, there is an 83% probability of two rate hikes in 2025.
The US dollar stays volatile as the Fed’s expectations shift. Mixed US PMI and consumer sentiment data have raised concerns about slowed growth. Traders anxiously await further guidance from the Core PCE Index and Q4 GDP data.
Broader risk sentiment is now playing a role in driving USD/JPY prices. Nvidia’s earnings reports and end-of-month flows could also stimulate the market.
Key Economic Events Today
Japan Corporate Services Price Index
ECB’s Schnabel Speaks
US Consumer Confidence, Richmond Manufacturing Index
The USD/JPY has formed a temporary bottom at 148.88 with a corrective bounce above 150.0 that couldn’t be sustained. The current price level of around 149.50 is vulnerable, and the odds of breaking the bottom are high. The 4-hour chart shows that the price has stayed below the 30-period SMA since 14th Feb. Meanwhile, RSI is well above the oversold region, which indicates that the potential for a deeper downside persists.
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On the flip side, a corrective upside could bounce to 38.2 Fib level at 151.12 ahead of 50.0 Fib at 151.82. However, the pair has to find acceptance above the 30-period SMA first.
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Polygon’s currency price (MATICUSDT) fell in the intraday levels, while hurt by a negative divergence in the RSI after it reached overbought levels compared to the price’s movements, thus sending out negative signals, while readying to breach the pivotal support of $0.286, amid the dominance of the main downward trend, as it traded alongside the secondary short-term trend line, with negative pressure due to trading below the 50-day SMA.
Therefore we expect more losses for the price, provided the support of $0.286 was breached, thus targeting the next one at $0.149.
The British Pound has rallied a bit in the early hours of Monday, as we continue to see a lot of noisy behavior, but I also recognize that this is a market that is paying close attention to multiple things at the same time.
Keep in mind that the British Pound against the Japanese yen is considered to be a risk sensitive currency pair as the British pound offers more in the way of interest rates and swap than the Japanese yen, which of course has been the victim of the carry trade for years.
However, the bank of Japan now is suggesting that they are going to raise interest rates to 0.75% by the end of the year.
And while kind of pointless, it does pay something, and it does attract some money back into the Japanese mainland as the carried trade struggles. Nonetheless, I do think that there is the possibility that we bounce rather significantly given enough time. After all, the swap at the end of every day does eventually add up.
On a Move Higher
If we can break above the 190 yen level, then it opens up the possibility of a move to the 192 yen level. On the other hand, if we break down from here, it’s the 188 yen level that I will be watching very closely because it opens up the possibility of a move down to the 185 yen level. It’s worth noting that pretty much all of the yen related pairs all look the same. So I think that tells us that the Japanese yen is the main driver that’s going on overall. This chart looks quite a bit different than the British pound does against the Swiss franc, which is the other carry trade currency, mainly because the Swiss have been cutting rather aggressively. As long as Japan is not cutting, then it makes a lot of sense that we will continue to see more choppy volatility. That being said, I’m comfortable going long, not so much shorting, at least not until we break down below the latest swing below. Expect a lot of noise but expect a lot of volatility due to the shifting expectations of the carry trade in general.
The GBPJPY pair failed to resume the negative attack despite the consolidation within the bearish channel, affected by the additional support at 188.10, to start forming sideways trades by fluctuating near 189.00.
We expect to witness more sideways trades until gathering the additional negative momentum to manage to break the current support and open the way to target the additional negative stations that might start at 186.90, while rallying above 189.75 will force it to postpone the decline until testing the bearish channel’s resistance line at 191.10.
The expected trading range for today is between 187.00 and 189.70
KILT/USD kept falling in the intraday levels, amid the dominance of the main downward trend in the medium term, while trading alongside the secondary short-term trend line, with negative pressure due to trading below the 50-day SMA, coupled with negative signals from the RSI despite settling at oversold levels.
Therefore we expect more losses for the price, targeting the support of $0.034, provided the resistance of $0.121 holds on.
KILT/USD kept falling in the intraday levels, amid the dominance of the main downward trend in the medium term, while trading alongside the secondary short-term trend line, with negative pressure due to trading below the 50-day SMA, coupled with negative signals from the RSI despite settling at oversold levels.
Therefore we expect more losses for the price, targeting the support of $0.034, provided the resistance of $0.121 holds on.
GBP/USD retreats from multi-month high it set early Monday.
The pair needs to flip 1.2650-1.2655 into support to keep the bullish stance.
Several BoE policymakers will be delivering speeches later in the day.
After closing the previous week in positive territory, GBP/USD stretched higher early Monday and touched its strongest level since December 18 at 1.2690. The pair seems to have entered a consolidation phase following the bullish weekly opening and it was last seen trading below 1.2650.
British Pound PRICE Last 7 days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Canadian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.22%
-0.39%
-1.72%
0.24%
-0.22%
-0.40%
-0.03%
EUR
-0.22%
-0.46%
-1.97%
0.12%
-0.36%
-0.52%
-0.15%
GBP
0.39%
0.46%
-1.44%
0.58%
0.16%
-0.06%
0.31%
JPY
1.72%
1.97%
1.44%
2.00%
1.56%
1.56%
1.69%
CAD
-0.24%
-0.12%
-0.58%
-2.00%
-0.44%
-0.64%
-0.28%
AUD
0.22%
0.36%
-0.16%
-1.56%
0.44%
-0.16%
0.20%
NZD
0.40%
0.52%
0.06%
-1.56%
0.64%
0.16%
0.37%
CHF
0.03%
0.15%
-0.31%
-1.69%
0.28%
-0.20%
-0.37%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The risk-positive market atmosphere in the early Asian session caused the US Dollar (USD) to come under selling pressure and helped GBP/USD gain traction. Although the market mood remains upbeat, with US stock index futures gaining between 0.5% and 0.7%, GBP/USD finds it difficult to preserve its bullish momentum.
In the second half of the day, the Federal Reserve Bank of Chicago’s National Activity Index will be the only data featured in the US economic docket, which is unlikely to trigger a noticeable market reaction. Meanwhile, investors will pay close attention to comments from Bank of England (BoE) Deputy Governor Dave Ramsden and BoE policymaker Swati Dhingra.
In case BoE officials adopt a cautious tone about the inflation outlook, the initial reaction could help Pound Sterling hold its ground. On the flip side, GBP/USD could push lower if policymakers voice their willingness to continue to ease the policy despite the stronger-than-forecast UK inflation readings for January.
On Tuesday, regional manufacturing surveys from the US and the Conference Board’s Consumer Confidence Index data from the US will be looked upon for fresh impetus.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart retreats toward 50, reflecting a loss of bullish momentum. Additionally, GBP/USD failed to make a daily close above the 100-day Simple Moving Average (SMA), currently located at 1.2655, despite rising above this level for three consecutive trading days.
On the downside, first support could be seen at 1.2600 (round level, static level) ahead of 1.2530 (Fibonacci 61.8% retracement of the latest downtrend) and 1.2500 (round level, static level). In case GBP/USD rises above 1.2650-1.2655 (Fibonacci 78.6% retracement, 100-day SMA) and confirms that area as support, it could face next resistance levels at 1.2700-1.2710 (round level, static level) and 1.2750 (static level).
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.
Strong signals from the Bank of Japan about continuing to work on tightening its monetary policy have brought more gains to the Japanese yen against the rest of the other major currencies.
The performance was clear regarding this in the performance of the USD/JPY pair, which plummeted last week to the 148.92 support level, the lowest for the currency pair in nearly three months, before closing the week’s trading stable around the 149.25 level.
This week in Japan will be a busy week with economic data, with retail sales, industrial production, and housing starts for January at the forefront of the events.
In addition, Tokyo’s inflation data for February will share the spotlight after hawkish signals from Bank of Japan members kept investors attentive to the timing of the next interest rate hike by the Japanese central bank.
In the US, the personal consumption expenditure report and comments from US Federal Reserve officials will be the centre of attention. Personal consumption expenditure prices will provide crucial insights into evolving price pressures, following US consumer price index and producer price index figures that came in higher than expected. US personal spending growth is expected to slow to 0.2%, while personal income is likely to rise by 0.4%, in line with the increase in December.
Meanwhile, the second estimate of GDP growth for the first quarter of 2025 is expected to confirm that the US economy grew at an annual rate of 2.3%, in line with the initial estimate. Additionally, durable goods orders are expected to rise 1.3% after a 2.2% decline in December.
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Trading Tips:
Watch the recent performance of the US dollar against the Japanese yen carefully as it moves towards good buying levels, so be on time to seize the most suitable trading opportunities, but without risk
The Bank of Japan is Ready to Strengthen Bond Purchases
Bank of Japan Governor Kazuo Ueda said that the Japanese central bank is ready to intensify its purchases of government bonds if long-term interest rates rise sharply. Speaking before parliament last Friday, he acknowledged that bond yields fluctuate, but he stressed that the Bank of Japan will move quickly in exceptional cases to ensure stable yield formation. Ueda pointed out that the recent increase in bond yields indicates market expectations for economic recovery in Japan and strengthening core inflation.
The Japanese central bank ended its massive stimulus program, which lasted for a decade last year, which included setting 10-year yields around zero through aggressive bond purchases, as it saw Japan approaching its 2% inflation target. In addition, the Bank of Japan reduced its bond purchases under a plan announced in July, with the aim of halving monthly purchases to 3 trillion yen by March 2026.
USD/JPY Technical Analysis and Expectations Today:
According to trading on the daily chart, the general downward trend of the USD/JPY pair is increasing in strength. As mentioned before, the movement of the currency pair below the psychological support level of 150.00 will strengthen the bears’ control over the direction and thus prepare for stronger downward breaches. The technical indicators are now closer to testing strong oversold levels, and this may be confirmed if the bears move towards the support levels of 148.70 and 147.00, respectively. In contrast, and over the same time period, a first break of the downward trend will not occur without moving towards the resistance levels of 152.40 and 154.60, respectively. The path of central bank policies, especially from the Japanese central bank, will continue to affect the performance of the USD/JPY currency pair.
