The UK pound rate today experienced a slight decline, but it is set to achieve its fourth consecutive week of growth against the US dollar. According to newly released data, the Bank of England’s momentum has waned, raising uncertainty about its ability to lower rates again when policymakers meet in August.

According to official UK data, British workers earned an average wage increase of 5.7% (excluding bonuses) in the months ending in May, which met market expectations.

Later, the pound was a trifle lower at $1.299, after getting too high another session of $1.301, right before the announcement of the workers’ wages hike.

The pound surpassed $1.30 for the first time since last July, increasing by 2.1% against the US dollar this year. This makes it the leading currency in 2024, following a 5.3% rise last year. In 2023, however, the Swiss franc outperformed the pound, gaining 9% and emerging as the strongest currency. Nevertheless, the currency has undergone a fierce war of attrition this year, shedding 5% of its nominal value.

When compared to the euro, the strength of the pound is evident. The pound has increased its value by 3% in 2024, marking its fastest growth against the euro in nearly two years. Pound Sterling Live Price is 1 GBP = 1,29 USD

GBP/USD 5-Day Chart

UK Inflation Meets Target

UK inflation in July matched the 2% target, according to figures published by the Bank of England on Wednesday.

Nevertheless, the inflation numbers that got printed were the ones that decreased the market’s chances of an August rate cut by the central bank since the services print was largely lower than expected. A positive side-effect of the key services print would be that it might lead to higher profit of companies operating in this industry. 

Yield spread is usually the main driving force of the Forex market, simply put, a set of investing principles based on market expectations are measured through the yield curve and its changes. The British currency is also holding its ground because of the Liberal Party’s historic victory.

Abroad, yields on UK government designated papers, otherwise called gilts, rose slightly, due to the publication of the consumer price index print. The 2-year yield increased by 2 basis points to 3.99%, while the 10-year yield rose by 1 basis point to 4.06%. Since bond prices and yields are inversely related, this indicates market adjustments. Looking ahead, the Fed is likely to slash rates by 0.25% in September, followed by two more reductions in November and December, totaling a 0.75% cut in interest rates for the year.

EUR/GBP, GBP/JPY Daily Outlook

The GBP/JPY pair has experienced a strong intraday recovery from the three-week low reached during Thursday’s Asian session, climbing back above the 203.00 level within the last hour. The spot prices are currently just a little bit up on the day, around the 203.30-203.35 region and it looks like now they managed to stop the recent pullback from the highest level since August 2008.

The EUR/GBP has recovered quickly after its dip to 0.8392, and the intraday bias is still neutral. A further decline is in favour.  Wednesday’s data showed that UK inflation is proving to be more stubborn than many had expected, which caused traders to discard their bets on an August rate cut and, in turn, the pound went above $1.30 for the first time since July of last year.

The growth in Britain has also been on the rise lately. On Tuesday, the International Monetary Fund revised its estimate of UK growth to 0.70% this year up from 0.50% in its previous set of global forecasts in April.

Pound Sterling Technical Analysis

The GBP/USD currency is going to experience a further hike in the short term in the range of 1.2937 which is the main support. The current price increase from 1.2298 should be viewed cautiously, considering the additional 100% distance from 1.2298 to 1.2612, reaching 1.3173. This is close to the key medium-term resistance level of around 1.3141. On the lower side, once the price breaks below 1.2937 minor support, the intraday bias will present the market with a new neutral environment to deal with at first.

The British pound to US dollar exchange rate demonstrated an extreme bullish run over the last couple of weeks. It has stood above the upward trendline that links the lowest swing from last year November.

The couple jumped over the essential resistance level at 1.2895, it was the highest swing on the 8th of March. The price is also getting very close to the high of last year, which is 1.3132.

UK Fiscal Situation and Pound Recover After Brexit

The British fiscal situation is one of the major problems. The UK public debt is projected to surpass 100% of GDP, and the government finds it hard to either increase taxes or reduce spending.

A hung parliament in France and political turmoil in the US presidential election, with the assassination attempt on the Republican candidate Donald Trump and the concerns over whether the incumbent President Joe Biden can run for another four years in office, led to the shakiness in the world’s markets.

Sterling has been the winner with the strongest performance across the euro area, as the unit was only 83.93 pence on Wednesday, marking its 2 years low.

The sterling has registered an increase of 2.30% this year against the US dollar, easily leading amongst the major currencies, with its nearest competitor, the euro, still down 1%.

UK rates should finish this year around 4.75%, which is lower than the anticipated 5.25%. This is slightly higher than US rates, projected to be in the range of 4.50-4.75%, and eurozone rates, which are around 3.30%.

Pound Sterling Live News: GBP/USD Forecast

Based on the pound sterling live price, the forecast for GBP/USD looks promising. GBP/USD was up by 0.6% early on Wednesday after an indecisive move on Tuesday. The pair touched its year’s high above 1.300 in the European morning. This psychological level is significant for traders and can influence pound sterling live price.

Wednesday’s data published by the UK’s Office for National Statistics showed that the year-on-year inflation rate measured by the Consumer Price Index (CPI) remained at 2% in June, which was below the mean of the forecasts. At the same moment, the core CPI grew by 3.50%, which was the same as May’s rise.

Most currency strategists lifted the GBP/USD predictions, considering the current levels to be from a month ago.

As a case in point, dealers now feel that the exchange rate, i.e., GBP/USD, will increase to about 1.300 during the next few weeks. This is a significant leap from the past few weeks when most people thought that Cable would turn back to 1.250-1.265.

If stability upgrades in the forecasts continue, the GBP/USD might rise to the immediate resistance at 1.280, which is key to reaching the psychological level of 1.300.