Early European trading on Monday saw the GBP/USD pair holding steady at around 1.2875. Despite the stronger tone, the pair’s bearish stance is reinforced by a Relative Strength Index (RSI) below the 50-midline, as evidenced on a 4-hour chart. The 1.2919 level is the immediate upward challenge, lying significantly above the Bollinger Band. On the other hand, the 1.2843 point remains the initial downward target, offering primary support.
Speculation of an imminent interest rate cut by the U.S. Federal Reserve (Fed) in September impacts the USD value and supports the leading pair. However, major changes are not expected from Wednesday’s significant US (Fed) Interest Rate Decision event.
Overcoming the 1.2919 resistance could pave the way for a bullish outlook if the Pound Sterling surpasses the 100-period Exponential Moving Average (EMA). This could result in reaching the July 24 high of 1.2938.
Steady GBP/USD trends amid economic factors
Beyond this, substantial resistance in the 1.2990-1.3000 range could create a roadblock for continual rise, marking the high from July 12 and a necessary psychological threshold from the market perspective.
On the downside, a slide below the 1.2843 level, the lower range of the Bollinger Band, could expedite the pair’s descent towards the low of 1.2777 observed on July 9. The July 4 low of 1.2739 is a significant reference point for the bearish trend.
Decisions on monetary policy made by the Bank of England (BoE) significantly impact the value of the Pound Sterling. The aim predominantly lies in maintaining price stability around an inflation rate of 2%. Interest rates are tweaked to enforce these decisions. Factors like quantitative easing and economic data, including GDP, Manufacturing and Services PMIs, employment, trade balance, also play a significant role in determining the Pound’s value. Key influencers range from changes in interest rates to inflation, and political climate as well.
It is clear then, that the strength of the Pound is governed by a complex interplay of various economic and political factors. Current trends and future predictions make for an interesting watch for investors, traders, and analysts alike, as they try to navigate the GBP/USD dynamics.
