- GBP/USD remains on the defensive on Monday amid a bullish US Dollar.
- The BoE’s hawkish tilt supports the GBP and limits the pair’s losses.
- Traders look to this week’s UK and US macroeconomic releases for fresh impetus.
The GBP/USD pair starts the new week on a softer note, although it lacks follow-through selling and remains range-bound around the 1.2900 level amid mixed fundamental signals.
The US dollar (USD) is steady below a four-month high hit last week amid expectations that US President-elect Donald Trump’s policies would boost inflation and restrict the ability of the economy. Federal Reserve (Fed) to aggressively ease policy. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair, although the Bank of England’s hawkish stance helps limit the decline.
Indeed, the BoE warned that the expansive Autumn Budget introduced by Chancellor Rachel Reeves is expected to boost inflation, suggesting it take a cautious stance towards rate cuts in 2025. Furthermore, risk appetite is helping to limit inflation. safe-haven dollar gains and offers some support to the GBP/USD pair, warranting some caution before opening aggressive bearish positions.
Investors also appear reluctant and may prefer to stay on the sidelines ahead of major macroeconomic releases from the UK and US. This week’s economic docket includes UK employment data on Tuesday, US consumer inflation figures .US and the Producer Price Index (PPI) on Wednesday and Thursday, respectively, followed by the UK’s preliminary third-quarter GDP and US retail sales on Friday.
Aside from this, investors will take cues from Fed Chair Jerome Powell and BoE Governor Andrew Bailey’s speech on Friday. This, in turn, will determine the next leg of a directional move for the GBP/USD pair. Meanwhile, the strong underlying bullish tone surrounding the USD could continue to cap spot prices, suggesting that any attempted rally could be seen as a selling opportunity.
The British Pound FAQs
The British Pound (GBP) is the oldest currency in the world (AD 886) and the official currency of the United Kingdom. It is the fourth most traded foreign exchange (FX) unit 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, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The British Pound is issued by the Bank of England (BoE).
The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it has achieved its main objective of “price stability” – a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for sterling, as higher interest rates make the UK a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing. In this scenario, the Bank of England will consider lowering interest rates to make credit cheaper, so that companies will take on more debt to invest in projects that generate growth.
The data released measures the health of the economy and may affect the value of the pound. Indicators such as GDP, manufacturing and services PMIs and employment can influence the direction of the Pound.
Another important data that is published and affects the British Pound is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly in-demand export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to purchase those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.