Market Data 
- The Pound Sterling declines against the US Dollar even though the latter plunges on firm Fed rate-cut prospects.
- Slowing US labor demand has prompted expectations of the Fed’s bulk rate cuts.
- Middle East tensions have escalated as Iran launched dozens of missiles on Israel.
The Pound Sterling (GBP) slumps to nearly 1.2770 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair weakens as risk-aversion intensifies on deepening Middle East risks. Also, the Cable drops sharply despite the plummeting USD. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, plunges to near 102.40, the lowest since March 11.
The US Dollar has been hit hard badly by firm speculation that the Federal Reserve (Fed) will reduce interest rates by 50 basis points (bps) in September. Also, traders have priced in more than 100 basis points (bps) rate cuts this year. The expectations of the Fed’s bulk rate cut were boosted by easing United States (US) labor market conditions and contracting activities in the manufacturing sector.
The US Nonfarm Payrolls (NFP) report for July showed that fresh payrolls came in lower at 114K than estimates of 175K and June’s reading of 179K. The Unemployment Rate jumped to 4.3% from expectations and the prior release of 4.1%. Meanwhile, activities in the manufacturing sector, as measured by the Manufacturing Purchasing Managers Index (PMI), contracted at a faster pace to 46.8 in July from the prior release of 48.5. A slew of weak economic data indicates that the economy struggles to bear the consequences of higher interest rates, which point to a slowdown ahead.
In Monday’s session, investors will focus on the US ISM Services PMI data for July, which will be published at 14:00 GMT. Activities in the services sector are estimated to have expanded to 51.0 after contracting to 48.8 in June.
Daily digest market movers: Pound Sterling weakens against its major peers
- The Pound Sterling exhibits a weak performance against its major peers, except Asia-Pacific currencies, as dismal market sentiment has dampened the appeal of risk-sensitive assets. Growing Middle East tensions and fears of an economic slowdown in the United States (US) have improved the appeal of safe-haven assets, such as the Japanese Yen (JPY) and the Swiss Franc (CHF).
- Tensions between Israel and Iran have turned into an all-out war after Iran-backed Hezbollah confirmed that the group launched dozens of missiles at Israel on Saturday. Iran vowed to retaliate against the assassination of Hamas leader Ismail Haniyeh by an Israeli airstrike in Tehran. The nation said last week that Israel has to pay the price for Haniyeh’s killing.
- On the domestic front, the British currency will be influenced by market speculation about whether the Bank of England (BoE) will deliver subsequent rate cuts in September. Last week, the BoE reduced interest rates by 25 basis points (bps) to 5%, with a 5-4 vote split, as expected. On the interest rates outlook, the BoE refrained from committing to a pre-defined rate-cut path.
- In the press conference, BoE Governor Andrew Bailey said, “We need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much.” About the United Kingdom (UK) service inflation outlook, Bailey commented, “Services price inflation may rise slightly in August before easing in the rest of the year.”
Pound Sterling Price Today:
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.
| GBP | EUR | USD | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| GBP | -0.89% | -0.60% | -3.43% | -0.60% | 0.51% | -0.22% | -1.64% | |
| EUR | 0.89% | 0.16% | -2.76% | 0.14% | 1.27% | 0.54% | -0.88% | |
| USD | 0.60% | -0.16% | -2.88% | 0.00% | 1.00% | 0.38% | -1.03% | |
| JPY | 3.43% | 2.76% | 2.88% | 3.00% | 3.94% | 3.37% | 1.93% | |
| CAD | 0.60% | -0.14% | -0.01% | -3.00% | 1.03% | 0.38% | -1.22% | |
| AUD | -0.51% | -1.27% | -1.00% | -3.94% | -1.03% | -0.72% | -2.14% | |
| NZD | 0.22% | -0.54% | -0.38% | -3.37% | -0.38% | 0.72% | -1.42% | |
| CHF | 1.64% | 0.88% | 1.03% | -1.93% | 1.22% | 2.14% | 1.42% |
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).
Technical Analysis: Pound Sterling hovers near a make-or-break zone
The Pound Sterling is at a make-or-break near the lower boundary of the Rising Channel chart formation on a daily timeframe. Historically, a pullback move in the aforementioned chart pattern is considered a buying opportunity by market participants.
The GBP/USD pair fell on the back foot after breaking below the crucial support of 1.2900 on July 25. Meanwhile, the 100-day Exponential Moving Average (EMA) near 1.2730 has acted as major support for Pound Sterling bulls. The 14-day Relative Strength Index (RSI) declines to near 40.00, which is expected to act as a cushion for the momentum oscillator.
On the upside, the round level of 1.2800 will be a crucial resistance zone for the Pound Sterling bulls. Further up, the two-year high near 1.3140 will be a key resistance zone for the pair.
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, aka ‘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.
