- Sterling buoyed by upbeat UK GDP and BoE Greene’s disinflation remarks.
- Trump reportedly gives Treasury Secretary Bessent room to adjust China tech controls.
- US adds 139K jobs in May, beating forecasts; Unemployment Rate steady at 4.2%.
GBP/USD registered minimal gains during the North American session after hitting a daily high of 1.3581, following a Wall Street Journal article suggesting that US President Donald Trump is granting maneuvering room to US Treasury Secretary Scott Bessent regarding tech sales and lift export controls on China. At the time of writing, the pair trades at 1.3532, up by 0.05%.
Pound lifts slightly amid easing US-China trade tensions and resilient UK economic outlook
The breaking news was met with cheers from investors as US equities traded in the red. Meanwhile, investors continued to digest a solid jobs report in the United States (US), which shows the economy added 139K new jobs, exceeding estimates of 130K, while the Unemployment Rate remained unchanged at 4.2%. This demonstrates the economy’s resilience despite cooling, primarily driven by higher interest rates resulting from uncertainty over tariffs.
The Pound Sterling has benefited from broad US Dollar weakness and a resilient UK economy due to stronger-than-expected Q1 2025 GDP figures. In the meantime, Bank of England’s (BoE) Monetary Policy Committee (MPC) member Greene said the disinflation process is ongoing and expects inflation to come down toward the bank’s target in the mid-term.
Traders would be eyeing Britain’s government spending plans this week. This, along with BRC Retail Sales, UK jobs data, and the Trade Balance, would be some of the catalysts for the GBP/USD.
In the US, the economic schedule will eye the release of the Consumer Price Index (CPI) figures for May, the Producer Price Index (PPI) for the same period, jobless claims, and the University of Michigan (UoM) Consumer Sentiment.
GBP/USD Price Forecast: Technical outlook
From a technical standpoint, the GBP/USD is upward biased, finding support at the 20-day Simple Moving Average (SMA) at 1.3520. The major bounced off those levels, sitting comfortably around the 1.3550 area, with traders awaiting a fresh catalyst.
For a bullish continuation, the GBP/USD must clear the June 5 daily high of 1.3616, the yearly higher, which could exacerbate a move to 1.37. On the flip side, sellers need to drive the pair below 1.35, which could immediately clear the path to test the May 25 swing low of 1.3412.
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.
