The GBP/USD pair saw a significant decline last week as the Cable hit fresh lows on Friday. This bearish trend was driven by upbeat US Purchasing Managers Index (PMI) data, which boosted the US Dollar and dampened risk appetite in the market.
GBP/USD closed the week at a five-week low of 1.2622, marking the third consecutive week of losses. The Bank of England’s decision to hold rates midweek did little to instill confidence in the Pound. Moreover, positive UK economic data such as Retail Sales and PMIs failed to offset the overall bearish sentiment.
Looking ahead, GBP traders are gearing up for next Friday’s Gross Domestic Product (GDP) release, as economic data in the UK remains relatively light in the coming week. On the US front, mid-tier releases are expected early next week, with the US GDP update scheduled for Thursday.
From a technical standpoint, GBP/USD is facing a steep bearish decline, with the pair hitting a five-week low and falling almost 1% from its peak bids. Daily candlesticks are pointing towards a further decline, potentially testing the 200-day Exponential Moving Average (EMA) at 1.2586.
The Pound Sterling (GBP) is the oldest currency globally, dating back to 886 AD, and remains the official currency of the United Kingdom. It is the fourth most traded currency in the world, accounting for 12% of all FX transactions. The key trading pairs for GBP include GBP/USD, GBP/JPY, and EUR/GBP.
The value of the Pound Sterling is influenced primarily by monetary policy decisions made by the Bank of England. The BoE adjusts interest rates to maintain price stability and achieve a steady inflation rate of around 2%. Economic indicators such as GDP, PMIs, and employment data also play a crucial role in shaping the value of the GBP.
Additionally, the Trade Balance indicator, which measures the difference between exports and imports, can impact the strength of the Pound Sterling. A positive Trade Balance strengthens the currency, while a negative balance can weaken it.
In conclusion, the GBP/USD pair is facing continued bearish pressure as market sentiment favors the US Dollar over the Pound Sterling. Traders will closely monitor upcoming economic data releases to gauge the future direction of the currency pair. It is essential to conduct thorough research and analysis before making any investment decisions in the foreign exchange market.