GBP/USD Forecast and technical analysis ► preview of the major events that move the British Pound (Sterling), and especially pound/dollar (cable) during the week. Here is some general information. Scroll down for the latest GBP/USD outlook
GBP/USD is a major pair and certainly one of the oldest. The nickname “cable” originates from the fact that the exchange rate was transmitted over the telegraph cable between the UK and the USA.
High volatility characterizes pound/greenback trading. In comparison to some of its peers, stop-loss orders are usually placed at wider margins.
Another characteristic of Sterling trading is that the pair “front-runs” economic releases from Great Britain. We often see a strong market movement ahead of publication. Rumors, leaks or sheer nervousness move GBP USD
The pound is a moderate “risk” currency. When the global mood is positive, GBP tends to gain against the USD, albeit usually not at the same magnitude as commodity currencies. When doom and gloom return to markets, Sterling is on the retreat.
Brexit talks and GBP/USD
The biggest market mover of GBP/USD is the surprising decision of voters in the United Kingdom to leave the European Union. This unprecedented move shook up Her Majesty’s currency. Brexit has sent Pound/USD to levels last seen in 1985. Post-Brexit GBPUSD forecasts vary by timeframe.
The economy did well in 2016, before and after the EU Referendum, but it slowed down in 2017. On the other hand, the weak pound pushed inflation above the rises in wages. The Bank of England has a dilemma amid the drop in standards of living.
Brexit negotiations seem deadlocked and could extend as the sides coalesce around a transition period. Nevertheless, the government is leaning towards a hard Brexit: more control and less trade and this could hurt the pound.