Sellers look to hold on as GBP remains below 1.3100

VaselineSeptember 9, 2024

0 4 minutes read

Sellers look to hold on as GBP remains below 1.3100

GBP/USD is trading at its lowest level in over two weeks below 1.3100.
Improving risk sentiment could help the pair limit its losses.
Buyers may stay on the sidelines as 1.3100 holds as resistance.

GBP/USD was under bearish pressure in the US session on Friday and erased its gains to end the week flat. The pair continues to decline at the start of the new week and was last seen trading at its lowest since August 22 below 1.3100.

Pound Sterling PRICE Last 7 days

The table below shows the percentage change of the British Pound (GBP) against the main listed currencies over the last 7 days. The pound was weakest against the Japanese yen.

	USD	EURO	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.00%	0.30%	-1.91%	0.61%	1.65%	1.75%	-0.12%
EURO	-0.00%		0.32%	-1.93%	0.58%	1.66%	1.74%	-0.14%
GBP	-0.30%	-0.32%		-2.25%	0.25%	1.31%	1.45%	-0.47%
JPY	1.91%	1.93%	2.25%		2.51%	3.66%	3.85%	1.74%
CAD	-0.61%	-0.58%	-0.25%	-2.51%		1.08%	1.14%	-0.72%
AUD	-1.65%	-1.66%	-1.31%	-3.66%	-1.08%		0.07%	-1.76%
NZD	-1.75%	-1.74%	-1.45%	-3.85%	-1.14%	-0.07%		-1.84%
CHF	0.12%	0.14%	0.47%	-1.74%	0.72%	1.76%	1.84%

The heat map shows the percentage changes of major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the British Pound in the left column and move along the horizontal line to the US Dollar, the percentage change shown in the box will be GBP (basis)/USD (quote).

Despite weak labor market data, the US dollar (USD) benefited from the intense flight to safety seen before the weekend and forced GBP/USD lower.

The U.S. Bureau of Labor Statistics said Friday that nonfarm payrolls rose by 142,000 in August. This reading followed the 89,000 increase (revised from 114,000) recorded in July and fell below the market forecast of 160,000. Other details of the report showed that the unemployment rate fell to 4.2 percent as expected, while annual wage inflation, as measured by the change in average hourly earnings, rose to 3.8 percent from 3.6 percent.

In Monday’s European session, the U.K.’s FTSE 100 rose more than 0.5 percent on the day, with U.S. stock index futures up between 0.4 percent and 0.75 percent. In the absence of high-level macroeconomic data, the USD may struggle to hold on to its strength if risk flows dominate financial market action in the second half of the day.

On Tuesday, the UK’s Office for National Statistics will release employment data. August US consumer price index (CPI) data will be analyzed by market participants on Wednesday.

GBP/USD Technical Analysis

GBP/USD closed a 4-hour candle below its 100-period simple moving average (SMA) for the first time since mid-August. Meanwhile, the Relative Strength Index (RSI) indicator on the 4-hour chart remains near 30, suggesting the pair is close to turning oversold.

If 1.3100 (100-period SMA) remains intact as resistance, sellers could look to maintain control of GBP/USD action. On the downside, 1.3040 (Fibonacci retracement level 38.2% of last uptrend) lines up as next support before 1.3000 (psychological level, static level) and 1.2960-1.2970 (Fibonacci retracement 50% , 200-period SMA).

If GBP/USD manages to break 1.3100 into support, it could face the next resistance at 1.3130 (23.6% Fibonacci retracement) before 1.3150 (50-period SMA) and 1.3200 ( psychological level, static level).

Frequently Asked Questions for Pounds Sterling

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 foreign exchange (FX) unit in the world, accounting for 12% of all trades, averaging $630 billion per day as of 2022. Its key trading pairs are GBP/USD, aka “Cable”, which represents 11% of FX, GBP/JPY or “The Dragon” as it is known to traders (3%) and EUR/GBP (2%) . The pound sterling 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 BoE bases its decisions on whether it has achieved its main objective of “price stability” – a steady inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the BoE 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 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 that economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to reduce credit so that companies borrow more to invest in growth-generating projects.

Data releases measure the health of the economy and can affect the value of the pound. Indicators such as GDP, manufacturing and services PMI 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, it may encourage the BoE to raise interest rates, which will directly strengthen the GBP. Otherwise, if the economic data is weak, the pound is likely to fall.

Another significant release of data for the pound is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports in a given period. If a country produces highly sought-after exports, its currency will only benefit from the additional demand created by foreign buyers looking to purchase these goods. Therefore, a positive net trade balance strengthens a currency and vice versa for a negative balance.

VaselineSeptember 9, 2024

0 4 minutes read

Pound Sterling PRICE Last 7 days

GBP/USD Technical Analysis

Frequently Asked Questions for Pounds Sterling

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