GBP/USD holds near 1.35 as UK PMIs and retail sales loom
- UK headline CPI rose 0.7% MoM in March, beating the 0.6% forecast, while core CPI cooled to 3.1% YoY from 3.2% prior.
- Thursday's UK flash PMIs are seen slipping into contraction, with Manufacturing forecast at 49.9 and Composite at 49.8.
- Friday's UK retail sales and US UoM inflation expectations round out a busy week for both currencies.
GBP/USD was little changed on Wednesday, settling close to 1.3510 after a choppy session that reached 1.3540 in London hours before fading toward 1.3490. Price has been pinned inside a 65-pip band through midweek, with long upper and lower wicks pointing to two-way uncertainty.
UK inflation data dominated Wednesday's London session. Headline Consumer Price Index (CPI) rose 0.7% MoM in March, slightly above the 0.6% consensus, with the annual rate edging up to 3.3% YoY, though core CPI cooled to 3.1% YoY against the 3.2% expected, tempering the hawkish read. The UK calendar stays busy from Thursday, with flash Purchasing Managers Index (PMI) surveys expected to show Manufacturing and Composite activity slipping into contraction at 49.9 and 49.8 respectively, and GfK Consumer Confidence seen deteriorating to -25 from -21. Friday's UK Retail Sales are forecast at 0.2% MoM, a tentative rebound from the -0.4% print in February.
On the US side, Thursday brings flash PMIs, with Services expected to return to the 50 threshold after a brief dip into contraction and Manufacturing holding near 52.5, alongside Initial Jobless Claims at 212K against 207K prior. Friday's University of Michigan (UoM) sentiment and inflation expectations cap off the week, with one-year inflation expectations seen steady at 4.8%. Broader direction for the US Dollar stays anchored by the Strait of Hormuz closure and elevated crude, while market hopes for a US-Iran resolution have softened as goalposts continue to shift.
GBP/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, GBP/USD trades at 1.3506, holding a mildly bearish near-term bias as it remains under the day’s open at 1.3517, which now acts as immediate intraday resistance. The Stochastic RSI has retreated from earlier overbought readings toward mid-range levels near 40, suggesting fading upside momentum after the latest pullback.
On the topside, the day’s open at 1.3517 is the first hurdle bulls need to reclaim to ease the current downside pressure and open the way to a more constructive recovery. On the downside, the absence of nearby mapped supports leaves the pair vulnerable to further slippage, with traders likely to monitor psychological round levels below 1.3500 as potential areas where dip-buying interest could emerge.
In the daily chart, GBP/USD trades at 1.3501. The pair holds a bullish near-term bias as price stands above both the 50-day and 200-day exponential moving averages (EMAs), which trend higher and suggest an underlying constructive tone. The elevated Stochastic RSI around 87 signals overbought conditions, hinting that upside momentum is stretched even as the broader setup remains supported by the rising medium-term averages.
On the downside, initial support emerges at the 50-day EMA near 1.3427, with the 200-day EMA around 1.3357 reinforcing a deeper demand zone on pullbacks. As long as the pair holds above these moving averages, buyers are likely to defend dips, though the overbought Stochastic RSI warns that consolidation or a corrective pause could precede any sustained extension of the uptrend.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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